But campaigners say the rules, under the new Regulation of Investigatory Powers Act, are an assault on personal privacy.
Under the regulations, employers can legally monitor staff phone calls, e-mails and internet activity without consent, for a wide range of reasons.
When the UK Government first proposed new regulations, the business community complained that they were far too restrictive.
After fierce lobbying, employers were given wider powers and the unions warned that privacy was under threat.
Monitoring staff is not new. Until the advent of automated telephone systems, company switchboard operators would often check on the first few moments of a phone conversation.
But modern communications systems mean information is streaming in and out of businesses at the click of a mouse.
Software, which can help bosses keep an eye on it all, is now a multi-million pound industry.
Steve Donovan, a director of Armstrong Communications in Salford, can use one such application to monitor what each of his 20 staff is doing on the internet.
His staff can be online quite legitimately for several hours a day. They all know that their boss keeps an eye on their internet traffic and e-mail - and that he is happy for them to use the net occasionally for personal reasons.
Right to privacy
Mr Donovan says he has to know what is happening online to protect his business.
"Do I spend 90% of my time looking at my PC, checking up on my staff? No, I'm too busy," he told the BBC.
"But if I wish to know if I've got a problem with a member of my staff, it means I can go back and check what they were doing online.
"If I need to discipline someone, I need to know all the facts if I'm going to do it competently."
The government says the new regulations are aimed at allowing businesses to get the most out of the new communications technology.
But many campaigners believe they directly contravene the Human Rights and Data Protection Acts, which state individuals have a right to privacy at work.
Draft guidelines issued by the Data Protection Commissioner also question whether blanket monitoring can be justified, and stress that employees have a right to work without constantly being monitored.
Privacy campaigners like Simon Davies of Privacy International say confusion over these issues could lead employers to behave illegally, and that the government's stance is wrong.
"Today is a bleak day for privacy in Britain," he said. "It signals that rather than moving forward to establish human dignity and autonomy, we're actually creating more systems of control.
"I think it's very important that people recognise that, and that employees make sure they use whatever mechanisms they've got to protect what rights they have left."
The government says employers must strike a balance between privacy and surveillance, but there is little doubt that unscrupulous employers could abuse the rules.