Numerous studies and surveys that have been researched by eMarketer, Burst Media, and Nielson, show that a majority of employees who have internet connection at work find it too hard to resist the urge to login to social networking sites, or use it for personal reasons.
These survey results also show that some employees can spend up to two hours a day looking at adult friendly sites (porn), gaming, chatting with other people in the office, or friends. Not all employees are that extreme, there are some that use it for more trivial tasks, such as paying bills online, making an appointment, or a little shopping. They're different reasons employees abuse the internet access at work, not having enough work to do, the connection is quicker, and some just don't have online access back at home.
Usually the boss is unhappy about finding out that some employees are not actually working when they're clocked in. It's not good time, or financial management for the employee or the employer. Unfortunately, your boss may have no other choice but to find a way to track what their employees are doing with their time.
There's not just internet surveillance, they can also monitor your desktop. This lets your boss check your emails, any offline usage, or any data that you open on your desktop. The financial cost of what your employer is spending for these programs are worth it for them compared to what their losing financially in manpower.
Most companies that have surveillance programs allow the system administrator to have access to individual desktops. This lets the system administrator check what an employee has deleted, songs, emails, or programs. You can clear these things, clock out, and leave work but your boss will still know how your time was spent.
Ethically your employer should notify you in some way, rather it's direct or implied, that they monitor internet use. Legally, your boss cannot get any personal information, nothing financial like a debit or credit card number. Also, it's legal for your employer to terminate you for abusing internet access. Ifs considered protecting the business, which is legally their property. Ultimately, it is the employees decision how they choose to spend their time at work.