Recently the Dutch Senate passed the bill on data breach notifications and sanctions. This bill introduces higher fines for non-compliance with the Dutch Data Protection Act. In addition, companies will be obliged to notify the Dutch Data Protection Authority (“DPA”) immediately of any data breach.
Depending on the exact circumstances, data subjects will also have to be notified if their data are compromised. Non-compliance with privacy laws can lead to an administrative fine for each violation, the amount of which can be up to a maximum of EUR 810,000 or 10% of the company’s annual net turnover. The new legislation will enter into force on 1 January 2016.
We see the media report increasingly about privacy sensitive information becoming publicly available because of a hack or security breach. With this new legislation, companies will be obliged to notify the DPA of any security breach in personal data protection “that has or is likely to have serious negative consequences on the protection of personal data” (new Article 34(a)(1) Dutch Data Protection Act). In addition to the duty to notify the DPA, the individuals whose personal data have been compromised must also be notified if “there is reason to believe that the breach could have negative consequences on their privacy” (new Article 34(a)(2) Dutch Data Protection Act). The practical implementation of these new provisions will be worked out in specific guidelines from the DPA. In any event, companies will be obliged to maintain an internal data breach register of any of the types of breaches mentioned above.
The new amendments to the Dutch Data Protection Act will allow the DPA to impose fines for the violation of a large number of general obligations (see the amended Article 66 of the Dutch Data Protection Act). These fines vary from a minimum of EUR 20,250, for relatively minor violations, to a maximum of EUR 810,000, for deliberate or repeated violations. For legal entities, the amount of the fine is not fixed: if the highest fine category is not sufficiently punitive, the violation can be sanctioned by a fine equal to 10% of the company’s annual net turnover.
Fines may only be imposed on the company if a binding instruction given by the DPA is not followed. By way of such an instruction, the DPA can inform the company what steps it should take to avoid paying the fine. However, if the violation concerned was either intentional or a matter of serious culpable negligence, the DPA is not obliged to given any instruction and can impose a fine directly on the company. It is important that companies prepare themselves for these legislative changes. The following steps can help your company to do so:
Identify the different types of personal data processing and the related data retention policies within your company. Is it really necessary to process all those data, and are the retention policies adequate?
- Check whether the level of data security is still adequate and whether your agreements with data processors need to be updated in order to ensure that they will inform you when a data breach occurs at their end.
- Identify which (data) security breach notification duties apply to your company. Is this (merely) the general notification breach duty or might other sector-specific duties apply?
- Set up a team that will be responsible for handling data breaches, and divide responsibilities amongst them, such as keeping an internal data breach register. The IT and legal departments should form part of this team.
- Create privacy awareness within your company, for example, by providing data protection training. Be aware that technical measures do not necessarily prevent human errors. Employees should be made aware of the risks involved and their responsibilities when they work with personal data.
To summarize: prepare and be aware!