Charlotte Giller, specialist in employment law at City law firm Bird and Bird, explains that employers routinely monitor and record employees' telephone conversations – and it's all perfectly legal.

Employers commonly monitor and record telephone calls made by their employees. In the financial services industry the records provide valuable evidence of transactions which can be relied on where there is a dispute. In other areas, employers may wish to assess employees' performance or customer satisfaction.

However, there are limits on employers' ability to monitor calls, particularly where it is done secretly or extends to personal conversations.

Communications Act 1985
The only protection of employees' privacy provided by English law is contained in the Interception of Communications Act 1985.

This Act sets out a framework for authorising the interception of public telecommunications networks and makes it a criminal offence to intercept a communication transmitted by post or a "public telecommunications system", unless the interceptor has either obtained a warrant or believes the other person has consented.

The Act does not however prevent employers eavesdropping on telephone calls made on an internal workplace telephone system even if the calls are made to people outside. The Government has proposed amendments to the Act which will cover this activity.

Licensing arrangements for private telephone systems offer some employees a degree of protection from covert monitoring because they frequently include a condition that the licensee should make every reasonable effort to inform all parties that a call may be recorded. This condition can be satisfied by informing the employee that monitoring will take place.

European Law
Article 8 of the European Convention on Human Rights provides that: "Everyone has the right to respect for his private and family life, his home and correspondence". There is a defence available to public authorities in limited circumstances, for example, where interference with the right to privacy is necessary in the interests of national security.

The European Court of Human Rights considered Article 8 in the case brought by Alison Halford, the Assistant Chief Constable with the Merseyside police force, against her employer.

She claimed that her office telephone calls were intercepted because her employers were trying to obtain information to use against her in relation to a sex discrimination claim she had brought against them.

She had not been warned that her calls might be intercepted and she had two telephones in her office, one of which was for private use. She had been specifically told that she could use her office phones to deal with her case. The Court found that in these circumstances Halford had a reasonable expectation of privacy and that the employer had breached regulations requiring that interception or monitoring of communications may only take place when legally authorised.

The right approach
It is not enough just to warn employees that their phone calls at work may be recorded or monitored. Employees must be taken to have a legitimate expectation of privacy for calls relating to personal and domestic matters.

There should be some telephone lines which employees can use for private calls in the knowledge that these will not be monitored.

Employers should continue to inform employees that recording or monitoring of calls made on official work phones may take place. If this is done, any employee using this system acknowledges the possibility that their calls may be monitored and this can be interpreted as implied consent. Employers may inform employees by means of staff notices, e-mails or incorporating the notice into terms and conditions of employment.

External callers should also be told that their calls may be recorded or monitored. This can be done by advertising and in customer literature.

Employers should develop guidelines covering their telephone calls policy and the ways in which they will use material derived from it.

They should limit recording and monitoring activities to situations where it is absolutely necessary and proportionate in the circumstances. For example, misuse of office telephones can be detected by itemised call reports, rather than recording.

Clear policies on personal telephone use at work should be drawn up, particularly where the calls are made at the employer's expense.