Privacy law shake-up! What does the EU General Data Protection Regulation mean for your company?
By: Bethany Entwistle
Published: 27/06/2018
Unless you’re willing to pay a fine of up to 4% of your company's annual global turnover or €20 million for failing to comply with the European Union’s General Data Protection Regulation (GDPR), it's time to review your company's privacy policy and practices.

The GDPR imposes new obligations on companies, big or small, that handle personal data of EU citizens.  Its purpose is to strengthen and unify the privacy and data protection rights of EU citizens, giving them more control over how their personal information is used, stored and shared by companies.  'Personal data' means any information relating to an identified or identifiable natural person (data subject).[1]

The key aspects of the GDPR that your company needs to be aware of include:

1.         Notification of a data breach – a data breach must be reported (to the NZ Privacy Commissioner and in some instances the data subject) within 72 hours of becoming aware of the breach.
2.         Right to be forgotten – each data subject is entitled to have his/her personal data erased.  This right is not absolute and is to be balanced with public interest in the availability of the data, among other considerations.
3.         Right to access data – each data subject has the right to confirmation as to whether personal data concerning them is being processed and for what purpose.
4.         Data portability – each data subject has the right to receive the personal data concerning them.
 
The focus of this article is on the first two aspects.  It will also address relationships with third party data processors. Ultimately, we recommend seeking legal advice in respect of your company's privacy policy to ensure all requirements of the GDPR are met.

As an aside, it is worth noting that a primary purpose of New Zealand’s Privacy Bill (due to come into effect on 1 July 2019) is to give effect to internationally recognised privacy obligations, including the GDPR. 

Notification of a data breach

What is a data breach?

To enable your company to meet its 72-hour reporting obligation, it is imperative that you implement a suitable reporting system.  To begin with, you and your employees must understand what a data breach is.

Under the GDPR, a data breach is defined very broadly as “any accidental or unlawful destruction, loss, alteration, unauthorised disclosure or access of a data subject's personal data”.  In practice, it may look like:
  • The loss/stealing of a laptop, tablet or phone which stores EU citizens’ personal data (all devices containing personal data should be fully encrypted, locked with a PIN/password and have full up-to-date backups of all data).
  • Sending an email containing EU citizens’ personal data to the wrong person (when sending personal data via email, always check that it is being sent to the right person.  Address auto-completion may cause you to email the wrong person without realising).
  • Disposal of confidential papers which contain EU citizens’ personal data (the papers or resulting waste should never be left in a place accessible to outside parties).
  • Sharing passwords (you cannot control how many times a password is shared and third parties may gain inappropriate access to personal data).
  • Copying files containing EU citizens’ personal data to USBs (USB memory keys and USBs in general can allow personal data to be taken from company computers and be innocently shared).
  • Altering the personal data of an EU citizen without permission.

When should you report a breach?

A data breach should always be reported to the Privacy Commissioner, as New Zealand's statutory authority.  If a data breach is likely to result in a high risk to the rights and freedoms of natural persons it should also be communicated to the data subject concerned, without undue delay.[2]

The GDPR Guidelines provide non-exhaustive examples of circumstances where a risk to data subjects may be considered unlikely.  These are where: 
  1. Personal data leaked is already publicly available;
  2. Personal data leaked is encrypted with a state-of-the-art algorithm, or securely hashed, and the key remains confidential and cannot be independently ascertained;
  3. There is a very temporary loss of access to personal data; and
  4. Personal data is accidentally sent to third parties that can be trusted, due to their relationship with the data controller organisation, to comply with instructions.

The Right to be forgotten

Under Article 17 of the GDPR, individuals have the right to have personal data erased.  This is also known as the "right to be forgotten".  The right is not absolute and only applies in certain circumstances.  Individuals have the right to have their personal data erased if:
  1. The personal data is no longer necessary for the purpose which you originally collected or processed it for;
  2. You are relying on consent as your lawful basis for holding the data, and the individual withdraws their consent;
  3. You are relying on legitimate interests as your basis for processing, the individual objects to the processing of their data, and there is no overriding legitimate interest to continue this processing;
  4. You are processing the personal data for direct marketing purposes and the individual objects to that processing;
  5. You have processed the personal data unlawfully;
  6. You must do it to comply with a legal obligation; or
  7. You have processed the personal data to offer information society services to a child.

You can refuse to comply with a request for erasure if it is manifestly unfounded or excessive.  In this instance, you can either request a "reasonable fee" to deal with the request or refuse to deal with it.  In both cases, you will need to inform the data subject and justify your decision. 

Third party data processors

It is important to keep in mind that a data breach by your company's third-party data processor may result in a data breach by your company (as the controller of that data).  To reduce the risk of this happening you should write to your third-party data processors to ascertain their understanding of the GDPR, their obligations, and their intention to comply with those obligations. 

You should seek an undertaking from the third party that it is complying / will comply with the GDPR. This should include an obligation on the third party to notify your company of a data breach, as well as the Privacy Commissioner in the first instance.

Conclusion

The new obligations under the GDPR pose many challenges for New Zealand companies. Considering the hefty fines, it is crucial that every company, big or small, understands its obligations and implements watertight methods for compliance.

For many, this will not be a straightforward exercise, particularly where third-party data processors are involved.  If you need assistance reviewing your company's privacy policy and practices, reporting processes, or dealing with third party data processors, the experienced team at Wynn Williams is here to help.
 
[1] an identifiable natural person is one who can be identified, directly or indirectly, by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person.
[2] GDPR, article 34.
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