With the European General Data Protection Regulation (GDPR) now in place, the UK will see tougher fines and stricter regulations, across all industries. GDPR regulation for small businesses is a hot topic, but are you complying with the changes?
Read our GDPR key points for small businesses and get clear on your responsibilities.
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Before we get into the detail of GDPR and what it means for your small business, it’s worth making a note of the key things you’ll need to keep an eye on and action. Bear in mind that the changes came into effect on 25 May 2018.
Here’s our quick definition and overview, followed by a checklist to keep handy.
The European General Data Protection Regulation (GDPR for short) is built around two key principles.
It's important to bear in mind that the GDPR applies to any business established in the EU and may apply to companies based outside of the EU that process the personal data of EU citizens in certain circumstances. See the GDPR checklist below for information on what ‘personal data’ includes.
The government has confirmed that Brexit will not affect GDPR, or its immediate running. It’s also confirmed that post-Brexit, the UK’s own law (or a newly-proposed Data Protection Act) will directly mirror the GDPR.
Serious breaches (that is, any breach which has an impact on the rights of data subjects) must be reported to the regulator (in the UK this is the Information Commissioner’s Office (ICO)). This should be within 24 hours where possible, but at least within 72 hours and the report must include information regarding what led to the breach, how it is being contained and planned next steps
Remember, your checklist needs to take into account past and present employees and suppliers as well as customers (and anyone else’s data you’re processing which includes collecting, recording, storing and using the personal data in any way).
The GDPR doesn’t yet fully define what constitutes ‘large-scale’, but some examples include the processing of patient data by hospitals, travel data and transport services, and customer data by an insurance company or bank.
One of the key principles of GDPR is to require companies not to hold on to personal data for longer than necessary, or process it for purposes that the individual isn’t aware of. Identifying your data categories – what personal data you have, and why – will be very helpful in ensuring you’re compliant with the GDPR.
Customer or individual ‘consent’ has been redefined and has become much tighter as a result. On top of this, requests for consent can no longer be hidden in small print but must be presented clearly, and separately to other policies on your website or communications – so no more pre-ticked boxes.
Consent may not be required for pre-existing personal data, as long as you have a legal basis that’s compliant with the current legislation (the DPA).
The principle here is that inactivity is no longer a legitimate way to confirm consent. Remember, this applies to you too, as a consumer with personal data rights of your own, and may be a welcome change!
It may sound complicated, but a fair processing notice is about giving people clear information about what you’re doing with their personal data. Your fair processing notice should describe:
You’ll also need to notify individuals of the existence of their personal data rights.
It’s easy for small companies with a stack of to-dos to see the GDPR as a burden. But in reality, it’s something that can be used to your advantage, adding value to your business.
By proving to potential and existing customers that your organisation is compliant with new laws that protect the rights of citizens just like you (and your customers), you could bring in more business.
No one likes having their data lost, stolen, damaged, misused, or shared without proper consent, and doing everything you can to protect your customers and grow their trust could be a unique selling point.
So, from fines to compensation claims, there are certainly serious reasons to get GDPR-compliant. But on a real-world level, see it as being worth your while to get organised behind the scenes, earn your customers’ trust, and be the company that respects personal data, rather than letting it sit on a long-forgotten spreadsheet.
It's important to bear in mind that the GDPR applies to any business established in the EU and may apply to companies based outside of the EU that process the personal data of EU citizens in certain circumstances
So the first question you need to ask yourself is, how often does your business deal with personal data? This includes your customer data of course, but have you factored in supplier data? Past and present employees? And is there anything else you’ve collected, that doesn’t fall into any of these groups?
If you’re collecting any of this data routinely, you need to comply with the GDPR, whether the data is on a spreadsheet, on your computer network, your mobile phone, or in the cloud.
Another key question is whether your business currently falls under the DPA. If so, the ICO has confirmed that the GDPR applies to you, but remember, the GDPR is much stricter than the DPA.
Being a small business doesn’t mean you fall out of the GDPR scope. It’s recognised that small businesses have fewer resources and pose less of a risk to data protection, so there may be more leniency by the ICO in relation to any non-compliance.
However, you’ll still want to ensure you’re compliant with the principles of the GDPR. This is because your business must still comply if it’s involved in regular processing (which includes collecting, storing and using) of personal data. It’s easier to follow the GDPR and get compliant, than to spend time figuring out how you can avoid complying, especially if you’re working without legal guidance.
It’s also important to note that even if your company falls under one of the exemptions, if you’re contracting with a larger company that conducts large-scale processing you may also be subject to the harsher end of the GDPR’s regulation.
Aside from the law, responsible data handling is a basic principle of good business upkeep. If you’re a one-person band but aware that your records are a bit all over the place, have you thought about how you’d explain a breach to your trusted customers?
You’ll see a lot about ‘personal data’ when reading up on the GDPR. It’s now got a more detailed definition, and the regulation has clarified that things like an IP address (the unique string of numbers that identifies every Internet-communicating computer) count as personal data. There are lots of other things though that will fall into the personal data category, so make sure you’ve checked the GDPR itself (using the handy links at the end of this article).
Quick check: Focus on your lists. Does your business hold HR records, customer lists and contact detail records, for example? Most do.
This is confirmed by the ico.org.uk, who state; "You can assume that if you hold information that falls within the scope of the DPA, it will also fall within the scope of the GDPR".
Whether it’s you keeping a spreadsheet of customer contact details, or an automated digital capture system, the GDPR will apply.
Article 9 in the GDPR defines ‘special categories of personal data’ and this includes personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, or trade union membership. They also cover genetic data, biometric data, data concerning health and data concerning a person’s sex life or sexual orientation. Generally, you’ll need explicit consent from individuals whose special category personal data you want to process, although Article 9 sets out a number of exceptions to this rule.
There are similarities between the GDPR and current Data Protection Act (DPA). However, crucial developments and rulings within the GDPR mean you’ll need to get clear on the new legislation, whether you’re up-to-date with the DPA or not.
One thing that really sets the GDPR apart is the changes made to the ‘accountability’ of data processors. This is a change from under the DPA, which placed more responsibility on the data controller (note, it’s still worth brushing up on your DPA compliance, as lots of its basic principles are pretty much repeated in the GDPR).
These are basic principles you’ll need to think about. Don’t get too hung up on whether you’re a controller or processor as both parties are required to make changes in order to comply with GDPR. At this stage, the key thing is to think about the personal data your small business collects, holds, uses, and shares, and how confident you are that the new principles hold true.
The GDPR applies to data ‘controllers’ and ‘processors’. In general, processing is defined as any operation performed on personal data, such as storing, collecting, recording, organising, sharing, erasure, consulting, etc. A controller is a data processor too, but they will also decide the purpose of the data processing activities.
For example, if you’re a small business offering a plumbing service and your customer details are managed using a contacts management app on your phone, hosted by a third party, this would generally make you the controller and the third party the processor. If on the other hand, you manage all of your data on a spreadsheet you’ve built yourself, you’re both controller and processor.
For processors, the GDPR carries a specific set of legal obligations some of which require you to:
If responsible for a breach, you’ll definitely have more legal liability than under the DPA. If a data subject, maybe one of your customers, has suffered as a result of a data breach, they could make a claim against the data processor directly.
As a data processor, the severity of your penalty will reflect how serious the consequence of your failure to comply with your obligations placed on you by the GDPR or followed the instructions of your data controller. These obligations include ensuring sufficient security measures, and you’ll suffer further penalties (see 'What are the GDPR penalties?' further down) if you fail to report the breach within the given time frame (a maximum 72 hours).
As well as this, if you’re a data processor and have paid compensation that the controller is partly or fully responsible for, you may be entitled to claim back the relevant damages from the controller themselves if you have a contract in place that states this. This area of claims is where cyber or professional indemnity insurance can come in handy, although you’ll always need to match the policy to your activities.
All controllers are by nature also processors and therefore subject to the same basic requirements. As a controller, the GDPR places obligations on you and your business to ensure any contracts you have with processors are compliant. Take a look at the section for processors above – it may be worth checking that their security measures and processes are GDPR-compliant before signing or renewing any contract.
The GDPR applies to businesses established in the EU that process personal data of any EU citizens, so far regardless of developments with Brexit. It also applies to organisations outside the EU which offer goods or services inside the EU.
Working with GDPR-compliant suppliers and contractors will reduce the risk of being impacted by a data breach, and any consequent fines and claims.
You could ask suppliers and contractors to complete a form that confirms the security measures they have in place, or you could conduct an on-site visit. If their existing measures aren’t sufficient, you should review your relationship to ensure they are compliant with GDPR.
Where your suppliers (as processors) are processing personal data on your behalf (as a controller), you have an obligation to update your contracts with them to include a number of mandatory clauses that can be found in Article 28(3) of the GDPR. These ensure that processors are contractually obliged to provide GDPR-compliant data protection standards.
It’s great that you’re thinking about this, as consent is a key concern tackled by the GDPR.
The ICO has a dedicated page on its website covering consent.
The GDPR toughens up penalties already existing under the DPA. These existing penalties include:
With the introduction of GDPR, these penalties got heavier.
Businesses in breach are liable to a dramatic increase in fines, with penalties reaching an upper limit of €20 million or four per cent of annual global turnover, whichever is higher.
Insolvency will be a real risk for non-compliant businesses as a result of these fines. But bear in mind the possibility that individuals can also sue you if they suffer as a result of your data management. This could be for material damage or non-material suffering, such as distress.
The website and checklist above are great resource for small businesses looking to step in-line with the GDPR.
From there, these more general websites can give a good overview.
Does GDPR impact your business? Let us know what you think below.
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