How common is this Kieren? i.e. companies monitoring general user internet access.
Small companies (probably) dont do it, but medium to large and certainly corporates will be doing it.
I work in IT; and have just left a medium to large international company where we were logging activity (I now work for a small company where its too much hassle to monitor [

])
Anyway, my understanding of the 'rules' is that there is some European legislation that 'protects' an organisation and their liability - hence they are allowed to log all activity if they want to - but also the employee is 'protected' in that an organisation can only use the recorded stats about you if they have very good grounds to suspect you were up to something naughty.
I (and the rest of the department) were told by the IT Manager / Director that we logged everything; but we could not look at the logs, or recover details from logs for anyone unless a Department Manager and the Personnel Manager asked.
So, if the manager of your department suspected you'd been surfing porn; they would have to bring it up with Personnel, and if both the Manager and Personnel thought there were grounds then and only then would IT be asked to recover that persons activities for a given time period only (ie. they would ask for your surfing / email / whatever stats for the month of April 2005, because that was the date window that the manager thought you'd been up to no good).
Like I said, those 'rules' were explained to us by our IT Manager (whom I have no reason to dis-believe) - I believe them to be true, so if an organisation pulls you up on some internet activity it must be because they have good grounds to think you've been naughty - they can't just routinely look at the logs (and lets face it, who has got time to these days ?)
Simply thing is don't worry about it unless you know you've been up to no good [:I]