Any monitoring of systems, even if it is minimal, must be made only after consent has been sought from the persons who are subject to monitoring. This is mostly done by institutions through their Acceptable Use Policy (AUP) or interception and monitoring policy document. With regard to in-depth monitoring of content, the institution will require specific consent to do so. It is thus essential that the individuals who are subject to monitoring be informed what the institution is doing and why.
With regard to gathering evidence where there is an allegation of improper conduct; it is to be ensured that this is done in compliance with The Data Protection Act, The Regulation of Investigatory Powers Act and The Human Rights Act.
It is essential that staff understand their responsibilities and the limits of their authority.
The UK Information Commissioner has issued a code of practice on
Employment Practices which includes a section on monitoring in the
workplace (Part 3) and this is essential reading for those involved in
decisions concerning the monitoring of personal information.
With regard to interception where there is suspicion of criminal conduct or use of illicit material, the recent JISC Legal webcast on Interception and Monitoring Law provides detailed guidance.
If the administrator comes across mail that clearly breaks the law, the wiser option would be to contact the police and have them conduct a lawful responsible investigation rather than conduct the investigation oneself. If it is doubtful whether the police should be involved, then a bit of covert monitoring could be conducted to establish a cause for contacting the police. But, the covert monitoring should be carried out only in very, very exceptional circumstances where there is a concrete suspicion concerning illegal activities.
As you are likely to be using materials under the Copyright Licensing Agency Ltd (CLA) licence you should become familiar with the guidelines which are provided by the CLA for use of the materials which a college may use. These guidelines are available online at - http://www.cla.co.uk/support/fe/index.html