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Sorry Mark, but you're wrong about the law. Even if it's written like that, it's not followed in the courts. There have been dozens, probably hundreds of high-profile cases regarding firings for surfing, blogging, porn, etc. Every single time (feel free to post a relevant example if this is incorrect) the judge has said, tough shit.
It just doesn't matter if he was formally warned, or warned at all. Not in cases involving web surfing, at least. Courts consider this to go under the "abuse" category, the category of unscrupulous behaviour that also includes things like information theft and sabotage and other immediately-firable offences. I realize it's not as severe in most cases, but that's just the way it is. If he were playing Solitaire or Minesweeper for 5 hours a day or making personal phone calls, they'd have to issue a warning and have a documentation trail, but not 'net abuse. Maybe it's just that the legal system hasn't caught up to technology yet, as it hasn't in so many other areas. Or maybe it's because you need warnings and documentation to prove things like excessive personal phone calls, but for web surfing it's all right there in the server logs.
This is even more cut-and-dry if the company has an internet usage policy. Not every company does, but if one does, and if the policy specifies "immediate termination" or anything similar, then no law can circumvent that. Employees know the policy, and they know they can be monitored. Although I don't believe that any respectable company would terminate an employee without warning for minor violations of its usage policy, they are still within their rights to do so.
As for circumstances... colour me cynical but I don't believe that anybody with a high-paying job or years of tenure has the time to goof off on tranceaddict at work, or the lack of motivation to do something constructive instead.
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IMO!
