WHEN he was fired, Mr Scott Sidell was angry enough.

Then he found out that his former employer was reading his personal Yahoo e-mail messages - after he had left the company.

In a lawsuit that he filed last month against Structured Settlement Investments, the finance firm he used to run, Mr Sidell said that executives at the company went so far as to read e-mail messages that he had sent to his lawyers discussing his strategy for winning an arbitration claim over his lost job.

The lawsuit filed byMr Sidell in Connecticut involves an unsettled area of the law, where changes in technology create tension between expectations of personal privacy and companies' rights to monitor the equipment they provide to employees.

The case's unusual combination of facts, which are in dispute, paves the way for a decision that could help set a precedent for dealing with personal e-mail at work.

Generally, courts have found that employers can monitor employees' e-mail communications on company computers.

But courts have also recognised greater privacy protection for e-mail messages sent using personal web-based accounts.

An employer's ability to read messages worries office workers, not least because e-mail messages have figured in criminal cases like the one brought recently against two former Bear Stearns hedge fund managers.

People disclose all sorts of personal information in e-mail messages, in the expectation - perhaps unfounded - that it will remain confidential.

Companies often adopt policies explicitly stating that everything an employee does on a computer provided by the employer is subject to monitoring.

But even so, and especially in the absence of such a policy, employees may have a reasonable expectation of privacy, said industry experts.

Moreover, the expectation of privacy would be even higher if employees used remotely hosted personal e-mail accounts like those provided by Yahoo.

Another question is how the company was able to read Mr Sidell's Yahoo e-mail messages.

In his complaint, Mr Sidell said that when he returned to his office after he was fired, he may not have signed out of his Yahoo account.

But Mr Sidell's former company alleged that he had actually returned to the office after he was fired and had begun using another employee's computer.

It said that Mr Sidell had used that computer and had sent trade secrets and confidential company information to his Yahoo e-mail account.

That twist, if true, may support the firm's claim against Mr Sidell for violating terms of his employment contract which, among other things, bans him from competing against his employer for three years after leaving the company.