From the utilitarian perspective, it can be assumed that the use of spyware will reduce the private use of computers and restore the lost work hours, which is a benefit for the company. Employee relationships with the company will be damaged, however, perhaps irrevocably, and this could also affect productivity. Managing the data from the spyware will also require company resources, which can be seen as a detriment. Deontologically speaking, it is generally considered wrong to spy, but it is also wrong to waste company time when an employee is accepting money in an agreement to work, not take care of private business. The two wrongs do not cancel each other out, but either decision leaves one side wronged, so neither system provides a direct answer to the problem. A combination of the two approaches is not impossible, and in fact makes a great deal of sense in this scenario. Acknowledging that it is wrong to spy, employees should be made aware of the fact that there computer use will be monitored, and announcements should be made both...

Employees can then make a reasoned decision of how they would like to use the company's equipment and time knowing that the company is monitoring this use. This satisfies the deontological dilemma, while providing the greatest utility in minimizing the harm to the employee/company relationship and maximizing productivity inasmuch as possible. The threat of detection is likely to prove a better deterrent of private use, anyway, and will limit the actual amount of monitoring needed.
References

Alexander, L. & Moore, M. (2007). "Deontological ethics." Stanford encyclopedia of philosophy. Accessed 24 January 2010. http://plato.stanford.edu/entries/ethics-deontological/#DeoThe

Andre, C. & Velasquez, M. (2008). "Calculating Consequences: The Utilitarian Approach to Ethics." Markula center for applied ethics. Accessed 24 January 2010.

Mautner, T., ed. (2002). The Penguin dictionary of philosophy. New York: Penguin.