Doing Business in Canada: Privacy

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Changes in the accumulation, storage and use of personal data – whether by government, employers, financial institutions or health care providers – have given rise to new and more serious privacy concerns. Given the recent evolution of privacy law worldwide and in Canada specifically, organizations considering doing business in Canada need to be aware of aspects of the Canadian legislative landscape that both address and impact the precarious balance between safeguarding personal privacy and the organization’s need to collect and use personal information.

Privacy Compliance

As of January 1, 2004, most organizations operating in Canada have been required to ensure that they collect, use and disclose personal information in accordance with applicable federal and provincial privacy legislation. That legislation regulates (in part) on the basis of:

  • The nature of the information;
  • The nature of the organization;
  • Where an activity occurs; and
  • The nature of the relationship of the organization with the individual.

Personal Information

Although the definition of personal information varies by jurisdiction, it generally refers to any information about an identifiable individual – other than the individual’s name, title and business contact information when used or disclosed for the purpose of contacting such individual in his or her capacity as a representative of an organization. 

Consent

Canada’s private sector privacy laws generally require that, before or at the time personal information is collected, individuals are made aware of:

  • The scope and nature of the personal information being collected;
  • The purposes for which their personal information is being collected, used or disclosed;
  • The jurisdictions outside of Canada where such information may be processed or stored; and
  • The name of a person who is able to answer individual questions on behalf of the collecting organization.

For the consent of an individual to such collection to be valid, it must be given voluntarily and without reliance on deceptive or misleading collection practices. As a consent given for one purpose is not valid for other purposes, organizations should try to anticipate their use and disclosure requirements in advance and develop their consent practices to address same. 

Federal and Provincial Legislation

While federal and provincial privacy legislation are similar, they do differ in a number of areas, resulting in a complex patchwork of privacy obligations that need to be addressed.  Generally, federal private sector privacy legislation applies to commercial activities involving personal information between provinces or across national borders, or undertaken by federal works, undertakings or businesses. Federal legislation also applies to commercial activities involving personal information within a province, unless the province has enacted substantially similar legislation. Thus far, Alberta, British Columbia and Québec have enacted legislation that is substantially similar to the federal legislation.

The federal legislation does not generally apply to an employee’s personal information, unless the individual is an employee of a federal work, undertaking or business, or the information is disclosed in the course of commercial activities. To some degree, the various provincial private sector privacy laws do apply to an employee’s personal information.

Jurisdiction

Where an organization undertakes activities, with respect to personal information, outside of a single jurisdiction, the organization will need to determine which jurisdictions’ privacy legislation applies, the various obligations that arise therefrom, and the best policies and practices to address those various obligations. 

How Privacy Impacts Your Business

Subject to certain exceptions, most organizations operating in Canada are now required, in part, to:

  • Appoint a person within the organization to be accountable for the organization’s privacy activities;
  • Disclose the purpose and obtain the consent of an individual for the collection, use and disclosure by the organization of the individual’s personal information;
  • Only use or disclose such personal information for the disclosed purpose, unless the organization has obtained the individual’s consent for any new purpose;
  • Allow the individual to access his or her personal information, challenge the accuracy of same, and withdraw his or her consent to the collection, use and disclosure by the organization of his or her personal information;
  • Safeguard the personal information in its custody or control;
  • Implement privacy policies and practices;
  • Train staff in respect of its privacy policies and practices; and
  • Only retain personal information for as long as is reasonably necessary to fulfill the disclosed purpose.

Dealings with Third Parties

Many organizations exchange personal information with other organizations and individuals.  These exchanges can include the outsourcing of certain activities to third parties (such as benefits administration or data processing), the exchange of information between business partners and the transfer of information as a result of the purchase or sale of a business. 

Each organization will need to review how and why it exchanges personal information with third parties, and the agreements governing those information exchanges, to determine if applicable privacy legislation permits such activities to continue and whether those agreements need to be amended. 

Outsourcing Risks

In addition to being responsible for its own compliance activities, organizations that use the services of third parties in their handling of personal information may be held responsible for the activities of such third parties. 

As a result, organizations are well advised to ensure that they have fully reviewed the activities of their service providers with respect to the organization’s personal information and that their agreements properly protect the organization. Such protection may be achieved by requiring service providers to be compliant with applicable legislation and by ensuring that the organization can look to its service providers for indemnification should a problem arise. 

Transaction Risks

The obligation to only collect, use or disclose personal information where the organization has the consent of the individual may extend to disclosure or collection activities related to a purchase, sale, merger, amalgamation, securitization or other transaction involving personal information. Federal and provincial legislation differ on whether consent is required to disclose personal information in the context of these types of business transactions. 

Organizations are well advised to consider the need for consent to transfer personal information as part of a business transaction, and the requirements of the various exemptions to such consent requirement, when designing the structure of a transaction. Careful planning to take advantage of one of the business transaction exemptions to the consent requirement can significantly reduce the costs of privacy compliance associated with such transaction. 

How Your Business Becomes Compliant

While every organization’s approach to privacy compliance needs to be tailored to the organization’s specific activities and needs, at a minimum, an organization should consider:

  • Appointing an individual to be accountable in respect of the organization’s privacy activities (often this individual is referred to as a Privacy Officer);
  • Assessing the organization’s activities in respect of personal information;
  • Establishing policies and practices to govern the organization’s activities in respect of personal information; and
  • Training the organization’s staff in respect of the organization’s privacy policies and practices. 

Conclusion

Privacy compliance can be a complex task requiring an organization to balance the need to comply with multiple privacy obligations with the need to adopt practical and manageable policies and practices. Companies considering doing business in Canada are well advised to review their expected activities in Canada in the context of applicable privacy legislation. 

Bennett Jones’ Privacy Law Group

Bennett Jones’ Privacy Law Group has performed groundbreaking work with governments, employers, institutions and both public and private information gatherers, advising on the legal implications of privacy protection and data dissemination. Our group offers both compliance and enforcement advice including in the context of corporate transactions.