From May 2018 on, the EU General Data Protection Regulation (GDPR) will apply to all European entities and – due to the Extended territorial scope – to a large extent also to entities outside Europe. The GDPR leads to a significant rise in data protection compliance duties as well as significantly increased fines of up to 4% of the global annual turnover of the whole company group. Thus, even data protection non-compliance in smaller and less important offices of a company group may now lead to significant ramifications. As the preparation for the GDPR requires re-organisation of various internal procedures, it is highly recommendable to commence with the preparation in very near future.

We recommend the following steps to prepare for the GDPR:

Step 1: Gap analysis Step 2: Risk analysis Step 3: Project steering and resource/budget planning Step 4: Implementation of a data protection structure Step 5: Local Add-on Requirements 6. Coping with the Brexit

Step 1: Gap Analysis

  • In order to assess a company’s (the “Company”) data protection to do’s, a “gap analysis” between the current status of data protection compliance on the one side, and the obligations deriving from the GDPR on the other side, should be made. Achieving compliance with the GDPR does not only mean that new legal requirements must be met. In the course of preparing for the GDPR, potential previous non-compliance with the requirements of the EU Data Protection Directive 95/46/EC should also be remedied.
    • Thus, in a first step information with respect to current data protection practices at Company (e.g. (i) which entities / departments rocess what kind of data for what purposes, (ii) internal responsibilities, (iii) how are data subjects’ rights safeguarded, (iv) are data protection officers implemented, (v) what IT security measures are in place etc.) should be collected (the “Existing Data Protection Structure”).
    • In a second step the requirements deriving from the GDPR which specifically apply to the Company will have to be assessed the “Company GDPR Requirements”).

Step 2: Risk Analysis

The efforts for implementing the GDPR requirements will be high; not all requirements can reasonably be fulfilled at once. Company will have to assess what kind of data processing activities are of biggest risk to (i) Company’s business and/or (ii) rights of the data subjects as well as (iii) which risks most likely lead to high fines, and arrange its resources respectively. Efforts for data protection compliance should be higher for risky processing activities and lower for less risky processing activities.

Step 3: Project steering and resource/budget planning

  • The GDPR implementation process requires collaboration of the Company’s European entities involved, as well as awareness of the to do’s on a management level at the Company. Company should assign project responsibilities to key personnel at the involved Company EU offices, as well as designate one ”head” project manager, leading the project. The head project manager can also be an external advisor.
  • Company should allocate the required resources. Planning should in particular cover (i) internal resources, such as internal personnel required for the implementation, (ii) legal costs as well as (iii) IT costs (e.g. for supporting software; IT audits etc.).

Step 4: Implementation of a data protection structure

The GDPR includes a number of additional requirements that have not existed to that extent under the EU Data Protection Directive, such as

  • Strengthened data subjects rights (e.g. regarding information, access and correction/deletion; right to data portability; right to object to data processing activities, “right to be forgotten”__- obligation to forward access/deletion requests to third party data recipients; higher requirements for __consent declarations etc.),
  • Strengthened organisational requirements (e.g. obligation to have data processing registers summarizing internal data processing activities; necessity of conducting data protection impact assessments and to appoint data protection officers in various cases; obeying privacy by design and by default requirements to ensure that data processing systems are privacy-friendly; obligation to link personal data with the purposes for which it has been collected as well as with the legal basis forits processing; documentation of data flows; potentially draft of deletion concepts etc.),
  • Strengthened notification obligations (e.g. potential obligation to inform the data protection authorities within 72 hours of a data breach, as well as the concerned individuals),
  • Strengthened IT/Cyber Security requirements,
  • Strengthened contractual requirements (stricter data processing agreements with external service providers as well as potentially within the Company-group must be concluded).

Please see the annex for more details regarding the major new requirements deriving from the GDPR. In order to cope with these new obligations, a (strengthened) data protection organisation within Company must be implemented:

4.1 Data Protection Management System The GDPR stipulates a number of requirements that are difficult to handle unless a thorough data protection management system is implemented. Such system should work group-wide, as even data protection issues in smaller Company offices may lead to high fines for the Company group as a whole.

a) Defined roles and responsibilities in the involved Company entities Company should set up a structure of data protection responsibles in all of its EU offices as well as a responsible head officer at the Headquarters. Respective structure should allow for (i) easily giving data protection related orders and/or advice to the involved offices (“top-down approach”) as well as (ii) communication of data protection related issues to the head officer (“bottom-up” communication).

b) Procedures and concepts Many of the GDPR obligations can only be implemented in practice if respective concepts, policies and standard operating procedures (cumulatively “SOPs”) are implemented, e.g. regarding data subjects’ rights, data breach notification obligations, Data Protection Impact Assessments etc. Thus, respective SOPs should be prepared to ensure the requirements of the GDPR are met.

c) Training Employees should be trained about their obligations and responsibilities deriving from the GDPR.

d) Documentation Company must implement appropriate measures to demonstrate compliance with the GDPR requirements. Those measures shall be reviewed and updated regularly.

4.2 Data processing agreements Due to the high number of agreements to be concluded with internal and external parties, a sensible data processing contract management strategy will have to be implemented:

  • The use of data processors (entities processing personal data on behalf of Company in compliance with Company’s instructions) will only be permissible if thorough data processing agreements with the data processors are concluded. Existing agreements will have to be checked to see whether they comply with the GDPR requirements and whether they must be updated; new agreements must satisfy the high standards of the GDPR.
  • In some cases, various Company entities may be regarded as joint data controllers if they jointly determine the purposes and means of data processing. In such cases data processing agreements between the involved entities generally need to be concluded.
  • If personal data is transferred from Europe to a country outside the European Union/European Economic Area, data processing agreements must often also be concluded.

Step 5: Local Add-on Requirements

In addition to the EU-wide GDPR requirements it must be assessed whether additional national requirements exist.

  • In all EU countries, additional employment-related requirements may exist regarding the processing of HR data (such as e.g. requirements to involve works councils in Germany and France or a labour office in Italy).

6: Coping with the Brexit

  • Often, international company groups have their European Headquarters in the UK, which will no longer be part of the European Union in near future. Accordingly, the requirements of the GDPR may not apply directly to the Company offices in UK, and data transfers from other Company offices in the European Union to the UK office may lead to legal issues. Company will have to assess how to deal with a Brexit from a data protection perspective.
  • There is a good chance that the UK will adopt privacy laws very similar to the European Union, so that the impact of a Brexit may not be too onerous. In any case, it will likely be sensible to fully apply the strict requirements of the GDPR also to UK even after a Brexit in order to limit internal bureaucracy and allow for a Europe-wide data protection structure.

Annex: Most important obligations of the GDPR

A number of new requirements are introduced by the GDPR. At a very high level, these are the most important new requirements:

1. Organisational requirements

1.1 Data Processing Registers, Art. 30 A register containing a record of processing activities under the company’s responsibility must in most cases be maintained. That record shall generally contain in particular the following information:

  • Name and contact details of the company and its data protection officer;
  • The purposes of the processing;
  • A description of the categories of data subjects and of the categories of personal data;
  • The categories of recipients to whom the personal data have been or will be disclosed including recipients in third countries or international organisations;
  • Transfers of personal data to a third country and the documentation of suitable safeguards;
  • Envisaged time limits for erasure of the different categories of data;
  • A general description of the technical and organisational security measures.

1.2 Data Protection Impact Assessment, Art. 35, 36 Where a data processing activity is likely to result in a high risk to the rights and freedoms of natural persons, the company shall, prior to the processing, carry out an assessment of the impact of the envisaged processing operations. In case the assessment indicates that the processing would result in a high risk in the absence of measures taken by the company to mitigate the risk, the supervisory authority shall be consulted.

1.3 Data Protection Officer, Art. 37-39 An independent, reliable and knowledgeable data protection officer must generally be implemented in case the company’s core activities consist of

  • Processing operations which require regular and systematic monitoring of data subjects on a large scale; or
  • Processing on a large scale of special categories of data (e.g. health, religion, race, sexual orientation etc.) and personal data relating to criminal convictions and offences.

A group of undertakings may appoint a single data protection officer provided that such data protection officer is easily accessible from each establishment. Local laws may require the implementation of data protection officers in additional cases (likely to be the case e.g. in Germany). Thus, one global data protection officer steering data protection EU-wide may prove helpful in order to cope with differing EU-wide regulations.

1.4 Implementation of Technical and Organisational Security Measures, Art. 32 Appropriate and reasonable state of the art technical and organizational measures must be implemented in order to protect the personal data processed.

1.5 Data Breach Notifications, Art. 33, 34 In case of personal data breaches with risks to rights and freedoms of the involved data subjects, the supervisory authority shall generally be informed within 72 hours after having become aware of the breach; in case of high risks for the data subjects, these will generally also have to be informed about the breach.

1.6 Privacy by Design, Art. 25 Companies shall generally implement appropriate technical and organisational measures

  • Which are designed to implement data-protection principles, such as data minimisation and integrate the necessary safeguards into the processing in order to protect the rights of data subjects (e.g. pseudonymisation).
  • For ensuring that, by default, only personal data which are necessary for each specific purpose of the processing are processed.

1.7 Representative in the EU, Art. 27 Companies subject to the GDPR but without establishment in the EU must appoint an EU representative for dealings with authorities etc.

2. Material requirements of data processing

2.1 Material requirements of data processing do not change drastically. As before, each processing of personal data (which is generally still interpreted extensively and also covers IP addresses and device identifiers) will require either valid data subject con-sent or a legal justification.

2.2 Cross-border data transfers to countries outside the European Economic Area still require additional justification (on top of 2.1), e.g. use of Privacy Shield, EU Standard Contractual Clauses or Binding Corporate Rules (or, in limited cases, consent).

3. Rights of Data Subjects, Art. 12-23

The rights of the data subjects have been strengthened. In particular, data subjects have following rights:

3.1 Information rights, Art. 12-14 Transparent and much broader notice than before must be provided to data subjects whose data is processed.

3.2 Access, deletion, rectification, restriction rights, Art. 16-19 Data subjects will generally have broad access rights with respect to their data; in some cases, they will also have the right to have their data deleted, rectified or the data processing activities restricted.

3.3 Right to Object, Art. 21-22 In some cases, data subjects have the right to object to the processing of their data on grounds relating to their particular situation.

3.4 Data Portability, Art. 20 In limited cases, data subjects may even have the right to request to receive the personal data concerning them in a structured, commonly used and machine-readable format and have the right to transmit those data to another company.

*** 1 The GDPR applies to all companies processing personal data

> in the context of the activities of an establishment in the EU, regardless of whether the processing takes place in the EU or not;

> of data subjects who are in the EU (regardless of Company’s seat), where the processing is related to:

– the offering of goods/services (even if at “no-cost-basis”) to such data subjects in the EU; or

– the monitoring of their behaviour as far as their behaviour takes place within the EU.