I laughed out loud at is your boss Calf123
valid point though, does your boss also lock the office doors during working hours? if so I'm pretty sure you're employed by Calf123.
More on topic, I'm fairly certain that that sort of monitoring isn't legal, as it's not your standard CCTV. Even if he IS allowed to monitor in that way he has to have a written policy and procedure in place outlining exactly what omonitoring is happening, where, why, at what times and how long any footage is kept for (not really relevant here)
The law states that in monitoring employees (whether it be checking their emails, listening ot recorded phonecalls or cctv) Employers should not act without reasonable and proper cause, in a way which is likely to destroy or damage the relationship of mutual trust and confidence between themselves and their employees.
I would say that this is likely to destroy said trust. Additional the Human Rights Act and the right to privacy therein come into play too.
also, in order to comply with these regulations an employer has to carry out an Impact Assessment PRIOR to setting up monitoring system in order to assess the impact on the employees and their privacy.
You say the company is small, do you have a HR department or person? if not then maybe take a look at a couple of sites online for advice and guidance and consider visiting the CAB for some legal advice.
www.acas.org.uk/index.aspx?articleid=5721