You should also ask the question "Why?"
If you want to block inappropriate sites in the workplace = a web filter.
If you want to prioritise bandwidth for commercial purposes = traffic shaping.
If you want to monitor employee use of work resources = internet monitoring.
Enterprise applications certainly exist which can do all the above (WebSense springs to mind, although that is not 'freeware') but be aware that your manager may need to have an Internet Usage Policy in place, perhaps as part of a wider Employee Handbook distributed to all staff, which sets out which of the above are in use and what the penalties are for inappropriate online behaviour.
In the event of using such activity in a warning or dismissal, the employee would have to have been aware that what they were doing was a violation of clearly defined rules to which they had previously agreed (I can only speak from a UK perspective but I imagine EU law would be similar).
I am aware that the above is deviating slightly from a 'sysadmin answer' but it should certainly be considered when installing any new network monitoring.