The European Industrial Relations Observatory (Eiro), an online monitoring service focusing on workplace issues, argues that the growing use of email and the internet in business is threatening the privacy of staff. It is therefore calling for more to be done to protect workers, and ensure firms respect data protection laws.

Eiro wants issues relating to data protection and the online monitoring of staff to be addressed by EU regulations, and as it is an EU advisory organisation its calls may be heeded.

Eiro recognises that in some cases there is a need to monitor workplace communications, but argues that firms should balance this requirement against the need to guard the privacy of individuals. Eiro notes that for many organisations internet monitoring is imperative - for example, to reduce the risk of confidential data being exposed or accessed by unauthorised parties. Companies may also legitimately want to discourage the use of work systems for non-work purposes, if such activity would reduce productivity, and they may want to discourage the downloading or transmission of offensive or illegal material for which they could be held legally responsible.

But Eiro emphasises that privacy must still be respected, otherwise firms may find themselves in breach of the law. A proposed EC directive on workplace data protection - due by 2005 - as well as the existing UK Data Protection Act and other European human rights legislation give staff some rights to privacy.

To help companies through the legal minefield, the government's Information Commission has issued guidelines on best practices. It says that monitoring should be as unobtrusive as possible and should, where possible, be done by automatic systems without human intervention. Reports on IT spending in the UK suggest that firms are indeed investing in automated monitoring systems.

Eurostat, the EC's statistical office, reports that 90 percent of staff in large UK enterprises can use the internet at work, and recent research indicates that many of these organisations now have automated monitoring systems. A July report from analyst firm Frost & Sullivan predicts that companies worldwide will spend more that £490m on internet filtering products in 2007 - more than treble last year's figure of £156m.

Frost & Sullivan said such spending will grow as organisations perceive an increasing need to keep tabs on staff, partly to prevent them from downloading copyright or offensive material, and partly to preserve bandwidth and avoid legal action.

"Cases of employees suing their company for harassment following exposure to inappropriate web sites, including pornographic and racist pages, are becoming more commonplace," said Jose Lopez, industry analyst at Frost & Sullivan. He added that URL blocking is one way that firms can balance the legitimate use of the internet for business while avoiding legal action for allowing employees access to offensive material in the workplace.

But Lopez added that many companies believe they have little to fear from their employees' online activities. "A prevailing confidence among employers in the ability of their workforce to use the internet responsibly diminishes the urgency of implementing web filtering solutions," he said.

European organisations appear less interested in automated monitoring than their counterparts in the US. According to Frost & Sullivan, European firms have spent significantly less than US companies on such technology.

However, this may change if the proposed EU directive on the protection of workers' data is approved.