In regards to Internet activity, nothing needs to be installed on the PC itself. If the employer uses a product such as WebSense, a complete report of all Internet activity, searches, keystrokes, visit times/lengths can be generated with a couple of clicks. I've been presented a report with my activity in the past.
It helps to be an employee of the IT department where you can dime outsiders while the department looks out for each other through means of circumventing the process.
That being said, the only thing the organization I work for (higher educational) use these type of services and devices for is to keep people from browsing porn and known ad-ware sites rather than compiling reports of their internet activity.
We constantly remind people we are not the web police!!!!