If your company processes personal information from another company or you transfer your company’s personal data to another company for processing, you should start paying attention to the EU’s new data protection regulation. To date, it has been possible to agree on these kinds of matters quite freely with relatively short contractual clauses. Starting on 25 May 2018, however, your company will have to have a written agreement on certain obligations with the controller of the register.

Controller and Personal Data Processor

According to the Data Protection Regulation, a controller is a company or other entity that keeps a list of persons and registers their data. In practice, nearly all companies are controllers, simply because they have employees.

If your company offers, for example, payroll administration services to other companies or you offer a cloud service for storing and processing other companies’ customer data, your company is a personal data processor.

Update All Your Personal Data Processing Agreements

The current set of norms—the Data Protection Directive and Personal Data Act—set certain data processing obligations, which mostly fall on the controller. The controller has been the one responsible for processing personal data in the manner required by law.

The controller and processor have been able to agree on their mutual obligations concerning the processing of personal data (for example, in a service agreement). The parties have been able to agree, among other things, on what data security measures to follow in relation to personal data processing and on whether the processor has the right to transfer personal data outside of the EU/EEA.

The new Regulation will also impose obligations on the data processor, and these obligations must be incorporated into the agreement with the controller if they aren’t already. In practice, this means that whether your company is a controller or a processor, all of your data procession contracts will have to be updated if they are to remain valid once the Regulation enters into force.

Agree on at Least These Things

If your company is a processor of personal data, the Data Protection Regulation obligates you to agree to:

  • ensure the security of personal data processing
  • make data breach notifications to the controller
  • appoint a data protection officer for your company if certain criteria are met
  • use a subcontractor only with the consent of the controller.

Regardless of whether you are in the role of controller or processor in an agreement, make sure the agreement includes the subject, duration, nature and purpose of processing, the type of personal data and the groups of data subjects (such as end customers). Remember to also include the rights and obligations of the controller. The agreement also needs to state the following:

  • Processing takes place according to the controller’s instructions.
  • The confidentiality obligations of each party.
  • The processor undertakes to take proper measures to ensure a level of security sufficient with respect to the risk of processing.
  • Subcontracting is only possible with the consent of the controller and the processor is liable for its subcontractors.
  • The processor undertakes to assist the controller in answering requests from data subjects, for example, in situations where data subjects want to access their own data.
  • The processor is obligated to assist the controller in ensuring the controller’s compliance with certain obligations, such as data deletion requests.
  • The process for deleting or returning data once processing services cease (unless other legislation requires that data be stored).

I believe that the importance of data processing clauses is set to increase and that parties will use more detailed clauses in the future. Correspondingly, I believe that contracting parties will likely start giving data protection matters more weight in other types of clauses as well, such as guarantee and limitation of liability clauses. Increased obligations also often end up being reflected in service prices.