Unlocking the EU General Data Protection Regulation: A practical handbook on the EU's new data protection law: Chapter 1: Introduction and Chapter 2: Preparing for the GDPR

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EU data protection law has come a long way over the last two decades.

When Directive 95/46/EC (the "Directive") was written in the mid-1990s, the highly networked and interconnected world in which we live today was merely a glimmer on the horizon. The internet itself was still a fairly new innovation to many people. Many organisations did not yet have public websites. Concepts such as online social media platforms did not exist—and certainly nobody had considered how they should be regulated. Consequently, courts and Data Protection Authorities ("DPAs") have increasingly had to adapt the Directive to a world it simply was not designed for.

Regulation (EU) 2016/679 (the General Data Protection Regulation, or "GDPR") will replace the Directive. The GDPR was published on 4 May 2016, marking the end of a four-year legislative process. It introduces a raft of sorely needed clarifications and updates, which will carry EU data protection law forward, well into the next decade. It also introduces major changes to the compliance burden borne by organisations.

The GDPR represents a hugely significant step in the development of privacy as a concept.

It is difficult to overstate the importance of the GDPR. First, it is very wide-ranging, and will impact almost every organisation that is based in the EU, as well as every organisation that does business in the EU, even if based abroad.

Second, the GDPR is extremely serious. For too long, EU legislators and DPAs have felt that organisations do not take their data protection responsibilities seriously enough, and so the GDPR dramatically increases the maximum penalties for non-compliance to the greater of €20 million, or four percent of worldwide turnover—numbers that are specifically designed to attract C-Suite attention.

Third, the GDPR raises the bar for compliance significantly. It requires greater openness and transparency; it imposes tighter limits on the use of personal data; and it gives individuals more powerful rights to enforce against organisations. Satisfying these requirements will prove to be a serious challenge for many organisations.

Enforcement of the GDPR is coming soon, and organisations need to be ready.

Early planning is essential. Enforcement of the GDPR starts on 25 May 2018. Organisations will find it very difficult to bring their business operations into compliance with the GDPR by this date unless they take its requirements seriously, and commit sufficient time and resources to satisfying those requirements. Because the GDPR affects almost all of the ways in which an organisation processes personal data, the scale of this task should not be underestimated.

Chapter 1: Introduction – Unlocking the EU General Data Protection Regulation

The GDPR

Aims of the GDPR

To address the difficulties arising under the Directive, the EU has created a new data protection regime—the GDPR. The GDPR is intended to harmonise data protection law across the EU, by removing the need for national implementation. In theory, this will mean that organisations face more consistent data protection compliance requirements across the EU. However, as set out in Chapter 17, there are several areas that remain unharmonised. In these areas, compliance requirements continue to vary from one Member State to the next. The GDPR is also designed to address technological and societal changes that have taken place over the last 20 years by adopting a technology-neutral approach to regulation.

Status of the GDPR

The GDPR entered into force on 24 May 2016. However, enforcement of the GDPR will not begin until 25 May 2018 (the "GDPR Effective Date"). Organisations therefore have a limited window in which to ensure that their data processing activities are compliant with the requirements of the GDPR. The national laws implementing the Directive in each Member State will continue to apply until the GDPR Effective Date. However, the process of becoming compliant with the GDPR will take much planning and a significant amount of time. Organisations should begin this process as soon as possible.

Purpose of this Handbook

Identifying the Issues

EU data protection law affects all organisations in the EU (and some organisations outside the EU—see Chapter 4). Many organisations that had few or no compliance responsibilities under the Directive have new or increased obligations under the GDPR. Because the GDPR applies across a very wide range of topics and across all business sectors, it is important for organisations to consider the topics that the GDPR covers, and the practical impact that each topic will have on their respective operations. This Handbook is designed to enable privacy professionals and legal functions within an organisation to quickly identify the issues that are of primary importance to that organisation, and determine how best to address those issues.

Comparing the Directive and the GDPR

In light of the fundamental changes that the GDPR will bring about, an important feature of this Handbook is the comparison between the requirements of the Directive and the GDPR, respectively. By illustrating the differences and similarities between the Directive and the GDPR, this Handbook provides organisations with clear guidance on which compliance requirements change, which requirements do not change, and how organisations should respond.

Structure of this Handbook

This Handbook takes a thematic approach to EU data protection law, addressing the core topics that affect organisations.

Each Chapter provides an analysis of a particular topic, incorporating the features set out below.

The meanings of defined terms are set out in the Glossary in Chapter 20.

An overview of the Chapter

In the first section of each Chapter (in Chapters 3 to 19), there is a brief summary covering the following key issues:

Why does this topic matter to organisations?

This section explains the reasons why the topic is important from a business perspective. For example, a topic may be important because it affects the ability of organisations to share personal data with third parties.

What types of organisations are most affected?

This section identifies the business sectors that are most likely to be directly impacted by this topic. For example, organisations that rely heavily on consent are most likely to be affected by the higher standards of consent imposed by the GDPR.

What should organisations do to prepare for the GDPR?

This section considers the steps that organisations should take, in order to ensure that they are ready for the changes under the GDPR on this topic. For example, organisations may need to conduct Impact Assessments for certain processing activities.

Detailed analysis

The main body of each Chapter (in Chapters 3 to 19) provides a table that reviews each point or issue within the topic. The table has four columns, as follows:

Issue

This column outlines the issue at a high level, and highlights any key points that affect the analysis.

The Directive

This column sets out the position under the Directive.

The GDPR

This column sets out the position under the GDPR.

materially changes

Where there are material differences from the position under the Directive, the "material change" icon appears at the start of the row, and the changes are shown in bold.

does not materially change

Where there are no significant differences, the "no material change" icon appears at the start of the row.

Impact

This column reviews the impact of each issue upon organisations, using one or more of the 'impact' icons. Each icon is explained in more detail below.

Icons to convey information quickly

The following icons are used in the table, to clarify the impact of each change:

materially changes

Under the GDPR, the position on this issue materially changes (e.g., the GDPR introduces a new obligation that did not previously exist).

positive

The impact of the GDPR on this issue is likely to be positive for most organisations (e.g., because the GDPR provides certainty in relation to a previously unclear issue).

neutral

The impact of the GDPR on this issue is likely to be neutral for most organisations (e.g., because the requirements under the GDPR and the Directive are essentially the same).

does not materially change

Under the GDPR, the position on this issue does not materially change (e.g., although the wording may be different in the GDPR, the nature of the relevant obligation is unchanged).

negative

The impact of the GDPR on this issue is likely to be negative for most organisations (e.g., because the GDPR introduces a new obligation on organisations).

unknown at this stage

The impact of the GDPR on this issue is unknown at this stage (e.g., because the impact on organisations is dependent upon secondary guidance that has not yet been written).

Chapter 2: Preparing for the GDPR – Unlocking the EU General Data Protection Regulation

Overview of key issues

Icons are used below to clarify the impact of each GDPR change. These GDPR impact icons are explained here.

The GDPR raises a number of key issues that organisations should consider, including the following:

neutral

Many things are changing, but not everything

The GDPR makes many important changes to EU data protection law, but it is not a complete departure from existing principles. Many of the concepts that organisations are familiar with will continue to apply under the GDPR (see Chapter 3 & Chapter 5).

negative

Territorial application

The GDPR applies to non-EU organisations if they: (i) offer goods or services to EU residents; or (ii) monitor the behaviour of EU residents. Many organisations that are not subject to existing EU data protection law will be subject to the GDPR, especially online businesses (see Chapter 4).

negative

Consent

Consent becomes harder for organisations to obtain and rely on. Notably, the GDPR states that consent is not valid where there is a "clear imbalance" between the controller and the data subject (see Chapter 8).

negative

Rights of data subjects

Some rights of data subjects are strengthened by the GDPR (e.g., the right to object) and some new rights are created (e.g., the right to data portability) (see Chapter 9). These rights may make it harder for organisations to lawfully process personal data.

negative

72 hour data breach notification

The GDPR requires businesses to report data breaches to the relevant DPA within 72 hours of detection. For many organisations, radical changes to internal reporting structures will be needed (see Chapter 10).

negative

Increased compliance obligations for controllers

The GDPR imposes new and increased compliance obligations on controllers (e.g., implementing appropriate policies, keeping records of processing activities, privacy by design and by default, etc.—see Chapter 10).

negative

Direct compliance obligations for processors

The Directive generally does not impose direct legal compliance obligations on processors. However, under the GDPR, processors do have direct legal compliance obligations, and DPAs can take enforcement action against processors (see Chapter 11).

negative

Appointing a DPO

Organisations that regularly and systematically monitor data subjects, or process Sensitive Personal Data on a large scale, must appoint a Data Protection Officer ("DPO") (see Chapter 12).

positive

Cross-Border Data Transfers

The GDPR provides for greater consistency in the application of BCRs in all Member States. The GDPR also recognises a number of other data transfer mechanisms (e.g., adherence to an approved Code of Conduct) (see Chapter 13).

positive

The One-Stop-Shop

Organisations established in multiple Member States may benefit from having a single "lead DPA". In most cases under the GDPR, such an organisation only interacts with its "lead DPA" on regulatory issues, and can avoid having to deal with multiple DPAs across the EU (see Chapter 14).

positive

Increased harmonisation

Under the GDPR, organisations face more consistent compliance requirements across the EU. However, organisations should bear in mind that national variations will persist in some areas (e.g., national security; employment law; and freedom of speech) (see Chapter 15 & Chapter 17).

negative

Remedies and sanctions

The consequences of breaching EU data protection law escalate dramatically under the GDPR, which sets the maximum fine for a single breach at the greater of €20 million, or four percent of annual worldwide turnover (see Chapter 16).

unknown at this stage

Relationships with other laws

There remains uncertainty regarding the relationship between the GDPR and other laws (e.g., the ePrivacy Directive) (see Chapter 18).

neutral

Transitional provisions

The GDPR was published on 4 May 2016, but enforcement does not begin until 25 May 2018. The Directive, and the national laws that implement the Directive in Member States, continue to apply until the latter date (see Chapter 19).

 

Analysing risk

Under pressure to allocate limited time and resources, organisations should generally focus their compliance activities in the areas of greatest risk.

Activities likely to be high-risk

blank

Activities likely to be medium-risk

blank

Activities likely to be low-risk

blank

Large-scale processing of Sensitive Personal Data
Sensitive Personal Data are subject to additional protections (see Chapter 7) and therefore there are risks involved in processing these data—especially on a large scale.

Automated profiling
Profiling activities (e.g., automated refusal of credit card applications; tracking customers' browsing habits to offer discounts; automated online recruiting activities; etc.) by their nature, affect the privacy of individuals. They therefore present an elevated level of risk.

Systematic monitoring
Systematic monitoring of individuals is generally high-risk from a privacy perspective. For example, most forms of IT network security monitoring routinely collect the personal data of employees.

New data processing technologies
New ways of processing personal data have the potential to introduce complex data protection compliance risks.

CCTV monitoring of public spaces
The GDPR specifically identifies the systematic monitoring of public spaces as a high-risk activity.

Processing Sensitive Personal Data
Almost all organisations process Sensitive Personal Data. Some companies process these data as a main business activity (e.g., clinical trials companies processing health data; recruitment companies processing criminal background checks; etc.). For those organisations, the risks are likely to be greater.

Processing the personal data of vulnerable individuals
It is important to take extra care when processing the personal data of children and other vulnerable individuals, to ensure that the fairness requirement is met (see Chapter 6).

Large-scale processing of personal data
Some organisations (e.g., insurance companies; online social networks, etc.) process personal data on a very large scale. A degree of risk is inevitable, because of the large number of individuals affected by issues such as database errors or data breaches.

Anonymised data
Where a set of personal data has been fully anonymised (i.e., it is impossible to identify any individuals from the data) the data will no longer be treated as personal data, and will not be subject to the requirements of the GDPR. However, full anonymisation is very difficult to achieve in most cases.

Pseudonymised data
Where a data set is structured in a pseudonymous format (i.e., the data are "coded" in order to make direct identification impossible, but individuals can be re-identified using a "key"—see Chapter 5) the risks associated with processing those data are likely to be reduced.

Secure small-scale processing
In general, processing small data sets, for limited purposes, with strong security is likely to pose a low level of risk to individuals. For example, an organisation that processes the personal data of its own employees at a single, secure location, using strong encryption, and with clear privacy policies and training in place is likely to face a low level of risk in relation to that processing.

Having reviewed and identified the relevant risks, organisations should take compliance steps depending on the level of risk in each case:

For high-risk activities

Conduct an Impact Assessment (see Chapter 12). Analyse the risks and determine whether there are technical or organisational ways to reduce the risks. Consult with the DPO (if there is one) and consider whether it is appropriate to consult with DPAs and/or affected data subjects.

For medium-risk activities

Consider ways of reducing risk, and adopt security measures that are appropriate to any remaining risk.

For low-risk activities

Try to ensure that as many processing activities as possible fall into this category. Processing activities in this category may be exempt from the 72-hour data breach reporting obligation (see Chapter 10).

Planning a new data processing activity

When planning any new data processing activity or reviewing an existing processing activity (e.g., creating a new HR database; collecting customer information; transferring data internationally; or any other activity involving the processing of personal data) it is important to consider whether the relevant organisation has complied with the core requirements of the GDPR, which are summarised below.

What does the GDPR require?

blank

Which activities are subject to this requirement?

blank

What must organisations do to comply?

blank

Is the processing "fair and lawful"?

This requirement applies to all processing activities.

Organisations must ensure that their processing activities are:

  • "fair" (in particular, organisations must ensure that they give data subjects clear and transparent notice of the ways in which, and purposes for which, their personal data will be processed); and
  • "lawful" (i.e., they comply with the GDPR and all other applicable laws) (see Chapter 6).
Have the Data Protection Principles been satisfied? This requirement applies to all processing activities. Organisations must ensure that their processing activities comply with all of the Data Protection Principles set out in Chapter 6 (e.g., the purpose limitation principle; the principle of data minimisation; data retention; data security obligations; etc.).
Is there a lawful basis for processing "regular" personal data? This requirement applies to all processing activities. Organisations must ensure that they satisfy at least one lawful basis for the processing of "regular" personal data in respect of each processing activity (see Chapter 7) (e.g., consent; legitimate interests; contractual necessity; compliance with legal obligations; etc.).
Is there a lawful basis for processing Sensitive Personal Data? (If applicable.) This requirement only applies to activities that involve the processing of Sensitive Personal Data. Organisations must ensure that they satisfy at least one lawful basis for the processing of Sensitive Personal Data in respect of each processing activity (see Chapter 7) (e.g., explicit consent; compliance with employment law; necessity for the purposes of legal claims; etc.).
Is there a lawful data transfer mechanism in place? This requirement only applies in cases in which a Cross-Border Data Transfer is proposed. To the extent that an organisation is planning to transfer personal data to a recipient outside the EEA, it must ensure that one of the grounds set out in Chapter 13 is satisfied (e.g., statutory permission; Model Clauses; Binding Corporate Rules; the transfer is made to an Adequate Jurisdiction; etc.)
Is it necessary to consider any national data protection laws in addition to the GDPR? This requirement applies to processing activities that are governed by the national laws of Member States. Organisations should consider whether their processing activities are affected by issues that remain subject to national data protection laws, as further discussed in Chapter 17 (e.g., employment law; national security; freedom of expression; etc.).
Is it necessary to conduct an Impact Assessment? This requirement potentially applies to all processing activities. If, in the process of answering any of the questions set out above, it is determined that a proposed processing activity is likely to pose material risks to the rights or freedoms of data subjects (e.g., because the planned activity that could be seen as invasive or because there are inherent security risks—see page 8) the organisation should consider conducting an Impact Assessment (see Chapter 12) in order to ensure that it has addressed the risks appropriately.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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