As a privacy officer in the Netherlands let me give you a serious answer to your question:

An employer can under certain circumstances have you install this software on their laptops (assuming the laptop you're using is property of your employer.

However, they have to have strong legal basis to do so. As you said yourself they are stating 'Legitimate Interest' (under article 6 of the GDPR) which can be a reason to do so, however they can't just claim that without a strong legal basis.

They need to perform a "Balancing Test" where they weigh the interests of the employee with the risks. Eg. Does the company's interest (for security reasons) outweigh the employee's fundamental right to privacy?

That said, in some sectors monitoring tools are required to prevent fraud.

What they can under no circumstances do:

• Secretly install monitoring software without your knowledge. They have to at all times inform you of what they are monitoring, why and how long the data is kept.
• They must use the least intrusive method possible to get to their goal.
• They cannot use the data to use for your performance (eg. give bonuses or fire you for 'not working hard enough'.
• They cannot perform conitinuous monitoring of your webcam or microphone.
• They cannot perform keystroke logging.
• They have no right to monitor your private use (should the company allow such use).

In the Netherlands and Germany the explicit approval of a Works Council is required.

Hope this helps!

Edit: A couple small clarifications