You know how you wait for ages for a bus to come (well, we do in Europe) and then three come along at once? Well it’s a little like that in the data privacy arena right now, as far as transfer of international personal data is concerned, anyhow. For years, there has been a reasonably steady and fairly consistent position from the various bodies responsible for this complicated and often confusing area of law, but in the last few weeks we have been hit with a significant change overnight and we are all left wondering where to get off.
The onslaught began with the European Court of Justice (CJEU) declaring that the EU Commission’s US–EU safe harbour regime is now invalid (read the judgment here). Thousands of US corporates with subsidiaries in Europe have relied on the safe harbour principles to allow them to transfer personal data from the EU to the US for years and to lose this overnight, without warning, is pretty shocking.
Hot on the heels of that judgment, just as we were all resting on our model clauses solutions, came a position paper issued by one of the leading German federal data protection authorities, which suggested that ALL data transfer to the US should be off limits (see below for details).
Fortunately, this was followed up quickly by a statement issued by the EU Article 29 Working Party (the influential advisory body comprising member state privacy regulators), which restored a measure of calm to the situation (read it here). It said that the safe harbour method is no longer effective but that the model clauses and binding corporate rules can still be used to transfer personal data from the EU to the US for the momentbut that we need to keep our eyes open for further guidance on this in the near future. More concerning, though, was that their statement then went on to say that if the safe harbour issue has not been resolved by January 2016, then “enforcement action” may be taken. It is not clear how this would work and who would be targeted first.
Next, came a communication from the EU Commission on the transfer of data from the EU to the US under the Data Protection Directive. Reassuringly, the communication indicated continued support for model clauses and binding corporate rules and confirmed that the Commission’s pre-existing decisions on the transfer of data to certain other countries they have previously confirmed offer adequate protection (including Canada, Israel, New Zealand and Switzerland) will be updated in light of recent changes, to clarify the position on transfers to those countries.
National data protection bodies across Europe have also been pressed into issuing statements and guidance on the position in their member states following this ground-breaking judgment and so below, we give you an outline of the state of play in the UK, Germany and France.
The United Kingdom
In the UK, the Information Commissioner (ICO) issued a reasonably sensible statement (read it here) in response to the ruling, acknowledging that business would have to take serious steps to address this issue, but recognizing that this may take some time. The ICO has pointed us towards the use of model clauses and/or binding corporate rules in the meantime – the preferred method used for transfer of data by many organizations already. Specific consent is also still an option but never one that the ICO (or the EU Working Party) has truly been happy with for employment-related scenarios. We are advised in the UK to keep our eyes out for further guidance on this issue.
On October 14, 2015, one of the German federal data protection authorities (ULD) for the federal state of Schleswig-Holstein issued a radical position paper addressed to private and public bodies in Schleswig-Holstein.
It called for a stop on all data transfer to the US. According to the ULD, neither the consent of the employee nor EU model clauses, could justify the data transfer in light of the CJEU safe harbour decision. The ULD, known for its strict interpretation of the law, says these will not work, at least not in Schleswig-Holstein. The ULD has warned companies that data transfer to the US may be prohibited or suspended by an administrative order and fines of up to EUR 300,000 could be imposed.
Unlike the UK ICO, the ULD does not seem to acknowledge that implementation of the CJEU decision will take some time. The ULD took the view that other German regions may follow its approach and with good reason: Schleswig Holstein has historically been a leader in data protection and so the ULD’s voice carries weight.
Somewhat reassuringly, on 26 October 2015, the conference of German Data Protection Officers of the Federal Government and Federal States (DSK) issued a far less restrictive position, which is in principle in line with the position of the EU Article 29 Working Party described above.
Key points from the DSK’s position:
- Following the CJEU decision, the DSK, unsurprisingly, points out that data transfer solely based on Safe Harbour principles is unlawful. The DSK requests companies to adjust their data transfer proceedings accordingly without undue delay. German DPAs will immediately stop any data transfer to the US where they become aware that the transfer is based only on Safe Harbour.
- Unlike the position of the EU Article 29 Working Party, the DSK has doubts on the validity of model clauses and binding corporate rules as a means for data transfer in light of the CJEU decision. The DSK has announced that it intends to thoroughly examine these methods, in light of the principles laid out by the CJEU in the safe harbour decision.
- According to the DSK, employee consent can justify the transfer of employee data to the US only in “exceptional cases” and not on a repeated or routine basis or in massive volume. Therefore, employee consent should be used sparingly only and not as a standard data transfer practice. Unfortunately, the DSK has not specified which transfers would qualify as “exceptional cases”.
- German DPAs will not grant any new authorizations for data transfer to the US on the basis of model clauses and/or binding corporate rules until the end of January 2016.
Following the CJEU judgment and the statement from the EU Article 29 Working Party, the French data protection authority (CNIL) has adopted a position consistent with the one advocated by the Working Party and less restrictive than the position in Germany.
A press release issued by the CNIL states that, pending a final analysis by the EU Article 29 Working Party of the impact of the CJEU decision on the model clauses and binding corporate rules, these tools can still be used by companies to transfer data overseas. However, the CNIL reserves the ability to review some transfers if it receives a particular complaint. The CNIL also confirmed that any transfer of personal data outside the EU based on the safe harbour principles will be regarded as illegal.
In France, companies previously relying on the safe harbour should immediately put in place a new system of protection based either on the model clauses and/or binding corporate rules or obtain a declaration from the CNIL that a particular country is recognized by the EU Commission as having a sufficient protection level for data transfers.
Global Round-up: So what should multi-national employers who regularly transfer employee data from Europe to the US be doing in the face of all of this?
- What is absolutely clear is that if you rely on the safe harbour principles, then you need to stop doing so as a matter of urgency, in all the relevant European jurisdictions.
- In the first place, if data transfer is unavoidable, then you can put in place intra group agreements incorporating the EU Model Clauses (which are a set of EU approved clauses governing how data is transferred) or binding corporate rules which you would also have to implement and adhere to on an urgent basis. This should work in all jurisdictions for the moment until the Article 29 Working Party or the relevant national Data Protection Commissioner issues different advice, although note that the position is less clear in Germany. The EU Commission has said that, in its view, the model clauses continue to be a viable alternative for data transfers and data protection bodies should not refuse such transfers with claims that the model clauses are insufficient.
- The position of the German DSK is not binding for the federal DPAs. Therefore, views of the different federal DPAs may differ. Having this in mind, businesses located in Schleswig-Holstein at least should consider keeping employee data transfer to the US to a strict minimum at this point, to avoid being fined.
- The next step is to take a serious look at your data transfer practices and think about how you can limit transfers of employee personal data and whether they are necessary at all.
- For employee data, consider if there is a way in which this can be handled solely in Europe and not be transferred to the US at all, except in specific and justified individual cases – often we find that holding general employee data on a US-based central server is a default option for a US-based international employer, rather than a strictly necessary one (in the views of the data protection authorities, at least). Keeping the data stored only in Europe would be, of course, the most risk free option.
- If data does have to be transferred, then you should ensure that this transfer is transparent, such that the employees have given informed and specific consent to the transfer and that there is a right for them to withdraw this consent. You could also look at whether the data being transferred could be anonymized before it is transferred (for example, if it is for the purpose of general reporting or statistics), to try to minimize the possibility of it being construed as personal data.