A report published through the TUC has branded the use of some tracking systems as simply 'snooping' on staff.
The number of fleets using tracking devices has soared in recent years but companies can also monitor drivers using mobile phones and smart cards.
Rory O'Neil, editor of Hazards magazine, which published the report called Stop Snooping, said: 'Snooping isn't just taking liberties, it is pure folly. Productivity goes down, accidents, ill health and sick leave go up and the workforce feels more like felons than valued employees.
'If employers want to know what their staff are doing they should ask them. Consultation and participation are not dirty words, they are the key to a productive workplace.'
Stop Snooping claims that companies are using a 'big brother' approach by logging telephone calls, monitoring e-mails, internet use, using CCTV, hidden cameras, smart cards and tracking devices.
Brendan Barber, general secretary at the TUC, said: 'Big brother bosses do not get the best out of employees. Staff who are being snooped on are less productive and less healthy.'
A similar US study found that monitored workers suffered more work-related depression, exhaustion and anxiety than unmonitored workers.
The 'Stop Snooping' report also covers drink, drug and health testing of employees and Barber believes more needs to be done in this area.
Barber said: 'There has been a regulated boom in the intrusive and ineffective drug, drink and health testing of employees. The positive step to tackle this needs to be toughened up to make sure tests are only used when necessary.'
The TUC's website www.worksmart.org.uk gives advice on tracking devices. It says fleets need to make a clear distinction between work-related business and private mileage, ensuring drivers are not tracked during private use.
Companies must also ensure that workers using monitored vehicles should be made aware of the monitoring policy.
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