A major Australian insurance company used -illegal" and -inappropriate" tactics to monitor employee email use and punish staff, the Australian Privacy Foundation has said.

Sources told ZDNet Australia that senior managers at Melbourne-headquartered insurance company CGU surveyed employee emails then contacted by telephone people whose names appeared in their personal messages.

Managers then removed email access from employees whose messages contained names they considered unrelated to corporate purposes, the sources said.

The number of staff affected by the practise - believed to be instigated by the company's human resources department - was not known.

Australian Privacy Foundation chairman Tim Dixon said the tactic was illegal according to federal privacy legislation - even if the company's email policies dictated that all employee emails were company property.

Dixon said it was illegal to contact an employee's acquaintances without the employee's consent.

-It's self-evidently a fairly intrusive and unacceptable practise," he said.

-I don't think it gives any respect to a person."

He said employees whose privacy was breached in this way were entitled to call the practise into review.

He added that it took less time to communicate a message via email than via telephone.

-There's a whole lot of reasons why people have to communicate during the work day," he said.

-People don't cease being humans when they start working."

CGU's staff email policy dictates that -all in-bound or out-bound messages will be inspected using software... to determine whether it is business related."

-Any e-mail falling out of these bounds will be quarantined with the intended recipient being notified that it is available for collection."

CGU did not return ZDNet Australia's calls.

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