Employees who have been able to watch online video streaming of the Olympics at work over the last few weeks should not take the perk for granted, especially if they are planning to catch up on the football now that the season has started. Employers are actively blocking employee access to certain websites for fear that staff will spend time surfing sites such as MySpace, Bebo and YouTube instead of working.

Accountancy firm Grant Thornton has stopped its employees accessing Facebook, however it is now reviewing its policy in relation to staff internet use. Jenny Balme, head of reward and relations at Grant Thornton, said: "We are not too draconian about it, but equally we expect people to behave responsibly. It's a grown-up and mature attitude. If people are found to abuse it, we take it very seriously and deal with it appropriately."

Not only can spending excessive time online damage staff productivity, but an employer's brand could be negatively portrayed through postings on social networking sites or associated with libel or copyright cases involving an employee. This may be behind many organisations' decision to block access to certain websites, such as MySpace and Facebook.

Kathleen Healey, employment partner at Freshfields Bruckhaus Deringer, said: "There are starting to be some quite messy libel actions with regards to the use of Facebook. The context in which those types of claims are starting to arise must be cause for concern for employers if they have got employees spending large amount of time on Facebook."

A key part of any policy is identifying employees' internet habits, particularly in terms of how long staff have been online and what they are looking at. But employers must be aware of the laws relating to privacy and data protection. "It is commonly accepted that employees have a certain level of privacy at work, so having a policy that says 'we reserve the right to look at anything you email and anything you look at on the internet' is quite draconian," said Healey.

Employers also can't blanket monitor their workforce unless they have a legitimate business case for doing so. Even if an employee is suspected of misconduct, which warrants investigation, employers do not automatically have the right to look at emails marked "private".

Employers also need to ensure they avoid diminishing the value of what is widely viewed as a benefit by overpolicing staff and making them feel watched. Peter Boreham, associate director at the Hay Group, said employers should adopt a balanced approach and enforce regulations with common sense. "If somebody's working attentively for two hours before spending ten or 15 minutes on the internet, most employers wouldn't have a problem," he said.