Tomas Hedin,who worked for Structured Consulting Sweden AB from his home in Gothenburg, was relieved of his duties following an internet chat session with a woman also employed by the company.
Management at the firm had told employees that a piece of software sent to their work computers contained a program that would update their computers. In reality, however, the company has installed a tool manufactured by SpectorSoft to keep watch over the employees' computer habits.
"They may well have seen everything we've done on the computer: every chat, every website we're visited, Facebook and our bank details. These programs can even be used to activate the web camera and the microphone. It all feels a bit like East Germany," Hedin told newspaper Göteborgs-Posten.
Shortly after one of their chat sessions, Hedin's colleague was told her services were no longer required. She was accused of trying to find ways to cheat her employer following a theoretical discussion she had with Hedin. She had also complained about her bosses.
A few days later, the company's husband and wife management team, Martin and Diana Carlsson, turned up at Hedin's home in Gothenburg.
"They had read more of the chat over the weekend and quoted some very private sections we had written to each other. It wasn't much fun," said Hedin.
The couple did not leave Hedin's home until they had reclaimed the company computer and convinced him to sign a dismissal agreement.
The company did eventually agreed to withdraw its dismissal of Hedin however following negotiations with his trade union. This enabled him to instead resign and continue receiving a salary for the duration of his notice period.
Hedin's colleague has not yet had her dismissal reviewed.
Prosecutors, police and the Data Inspection Board have differing opinions as to the legality of the surveillance of employees.
According to prosecutor Håkan Roswall the company was within its rights to install spyware on its own computers.
"As long as you own the computer you have the right to install spyware that keeps track of everything from bank transactions to web cameras," he told Göteborgs-Posten.
But Mats Björklund, a legal expert from the Data Inspection Board, countered that data protection laws made it illegal for employers to monitor workers without the staff's consent.
"Obviously one is not authorized to secretly send spyware to people," he said.