Your privacy – our care!

Following our previous publications regarding the GDPR, we will now review one of the entirely new concepts in data protection introduced by the Regulation, namely accountability.

Accountability in practice means that the data controller is able to demonstrate at any time that personal data are processed lawfully, fairly, in a transparent manner and limited to clearly defined purposes, keeping the data accurate and up to date and retaining it only for the time required to achieve these purposes, while ensuring an appropriate level of security and protection of the personal data.

Accountability implies proper documentation of all the processes of processing personal data within the undertaking. In other words, undertakings should keep documentary track of the processing – relevant written records allowing for traceability of the data processing processes and serving as an element by which to demonstrate compliance with the GDPR requirements in the event of a CPDP inspection.

Among others, some of the most essential tools for achieving accountability are the following:
• maintaining records of the processing activities under Art. 30 GDPR;
• proper regulation of the relations with data subjects with regard to data processing (through personal data protection policies, privacy notices, etc.);
• proper regulation of relations with third parties regarding the transfer of data (contracts between controllers and contracts between controllers and processors);
• designation of a data protection officer, where applicable;
• conducting an impact assessment in the presence of a high risk to the rights and freedoms of the data subjects;
• timely communication to the Commission for Personal Data Protection and the data subject in cases of personal data breaches;
• implementing voluntary certification mechanisms and/or compliance with codes of conduct;
• аdopting internal rules for personal data protection (guidelines, policies, etc.).

Of the above listed tools, particular attention should be given to record-keeping of the processing activities. These records shall be maintained by the personal data controller and the processor and shall be made available to the supervisory authority upon its request. The content of the records is laid down in detailed in the GDPR (Article 30, paragraphs 1 and 2).

The obligation of record keeping does not apply to organisations with fewer than 250 employees unless (i) the processing they carry out is likely to result in a risk to the rights and freedoms of data subjects, (ii) the processing is not occasional, or (ii) includes special categories of personal data or personal data relating to criminal convictions and offences. Regardless of which of these exceptions is present, the organisation concerned shall keep records of the relevant processing activity.

The impact assessment is also important for adherence to the principle of accountability. The Working Party established by Art. 29 accepts that the data protection impact assessment is a key tool for achieving accountability as it not only contributes to compliance with the requirements but also demonstrates the existence of appropriate safeguards.

The Working Party established by Article 29 – an European Union data protection advisory body – in one of its opinions on the old data protection regime points out some of the categories of general accountability measures other than the ones listed above, the most important of which are[1]:
• identifying all data processing processes within the organisation;
• ensuring adequate level of data protection, training the staff members processing or responsible for personal data (such as heads of human resource departments), but also IT managers, developers and business units directors, as well as allocating sufficient resources for protection of personal data within the organisation;
• establishing an internal mechanism for handling complaints;
• developing internal procedures for the effective management and reporting of data protection breaches;
• implementing and monitoring verification procedures to ensure that all the measures are not only formal ones, but they are actually introduced and implemented (internal or external audits, etc.).

What is the practical need for the principle of accountability and why should an organization make efforts to comply with it?

Personal data are a specific type of “resource” for any organisation. They constitute a powerful business tool as they provide information about the choices, preferences, attitudes and needs of consumers. This opens up great prospects for better marketing, PR, etc. Besides being a resource, personal data are a special category of information that may affect the privacy of the persons they relate to, or allow for malpractices (manipulations, etc. – an example of this is the scandal with Cambridge Analytica and data from the social network Facebook). Therefore, organisations should ensure adequate level of protection for this type of data. This is increasingly important in the context of the new rules and high sanctions introduced by the GDPR.

The purpose of the accountability principle is to gradually develop a culture of proper documentation of the entire movement of any personal data within the organisation. This would allow companies to have greater control and will enable them to more adequately manage their resources, and in a case of an inspection – to demonstrate compliance with the GDPR requirements.

[1] Opinion 3/2010 on the principle of accountability, WP 173, Adopted on 13 July 2010, p. 11-12.

On 30 April 2018, less than a month before the date of which the new European Data Protection Regulation – Regulation 2016/679 (GDPR) begins to apply, a Bill on Amendment and Supplement to the Personal Data Protection Act, currently in force in Bulgaria, was published in the public domain (the Bill). The Bill aims at harmonizing the Bulgarian legislation on the protection of personal data with the European one.

In this publication we will only focus on some of the most important and interesting elements of the Bill, and the whole Bill should be subject to detailed analysis and evaluation by all stakeholders in the following days:

• The Commission for Personal Data Protection (CPDP), which had so far fulfilled this function, was officially appointed as a supervisory body within the meaning of GDPR. It will be the independent body that will monitor the protection of individuals in the processing of their personal data and the enforcement of the Regulation.
• GDPR introduced a new figure to society, namely the Data Protection Officer. With the Bill, the Bulgarian legislator provided for a new ground for appointing such a person, setting precise limits for his appointment, namely the processing of personal data of “10,000 individuals”.
• The Bill provides that the CPDP should organize and conduct trainings of the persons designated for taking the position of a “data protection officer” or of persons wishing to be trained to take up this position. The trainings will be paid at a rate set by the Minister of Finance. This is a specific national solution that has no analogue in GDPR and which is rather controversial, because the European legislation does not require specific certification/mandatory registration for this position.
• One of the Bill’s interesting innovations relates to following obligation: in case data is received without a legal basis, whether by a controller or a processor, the latter has to return it immediately or deleted it within one month of getting aware of the fact.The age threshold for obtaining children’s consent f
• or the provision of information society services is reduced (from 16 years under GDPR to 14 years under the Bill). Here the change is quite reasonable considering the “total incapacity” institute, established for persons under 14 years of age under Bulgarian law.
• According to the Bill, public access to National Identification Number / Foreigner Identification Number will be provided solely if required by law. Therefore, controllers providing electronic services will need to take technical and organizational measures to avoid National Identification Number to be the only identifier for the provision of the service.
• The Bill contains specific rules for balancing the freedom of academic, artistic and literary, expression with the protection of personal data.

Important changes also stand with regard to employers. The legislator took advantage of the opportunity provided by Art. 88 of the GDPR, by establishing special rules in this respect.

• The Bill provides for the prohibition of copying the national ID document, the driving license, the worker / civil servant residence permit, with only one admissible hypothesis, namely the existence of an explicit legal obligation on the controller or the processor.
• Employers will also need to provide for a number of rules and procedures to show compliance with the new law and to ensure that these rules and procedures are brought to the attention of employees. Such will be needed, for example, in the framework of: (i) a system of evidence of breaches, (ii) restrictions on the use of in-house resources, and (iii) access control, working time and labor discipline.
• The employer will be able to store personal data of participants in personnel selection procedures for up to 3 years.

With the Bill, in addition to synchronizing national provisions with GDPR requirements, the legislator will also transpose the Directive (EU) 2016/680 of the European parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and on the free movement of such data, and repealing Council Framework Decision 2008/977/JHA, and has dedicated a whole chapter of the Bill to this end.

Interestingly, the legislator set out minimum thresholds (such do not exist under the GDPR) of BGN 10,000 for infringements punishable with a fine of up to EUR 20,000,000 and BGN 5,000 for infringements punishable with a fine of up to EUR 10,000,000.

For offenses other than those specified in the GDPR, a fine of BGN 1,000 to 5,000 is introduced. For failure to comply with the CPDP’s prescription, the sanctions will also vary in quite high amounts, namely between BGN 2,000 and BGN 200,000.

It remains to be seen whether this Bill will be adopted according to the proposed draft version. In any case, the positive intention of the Bulgarian legislator to settle the issue of bringing national legislation in line with the new rules on personal data protection before 25 May 2018 should be appreciated. Unfortunately, however, the short deadlines for public discussion (opinions on the Bill can be submitting by 14 May 2018) may be a barrier to the possibility of a detailed and comprehensive national discussion of the proposed measures.

Link to the Bill

Following our previous publications regarding the GDPR, we shall now look into the most sensitive GDPR-related topic, namely fines and penalties.

We shall discuss the limits for these administrative fines, the criteria applicable to determining the amount thereof, as well as the specificities in work when determining fine amounts in case of undertakings and how group corporate structures shall be affected by the specificities in question.

The Regulation provides for two limits of administrative fines depending on the type of infringement:

• Infringements of any of the obligations of the controller/processor (stipulated in Article 8, 11, 25-39, 42 and 43 of the GDPR) are subject to administrative fines up to 10 000 000 EUR, or up to 20 % of the total worldwide annual turnover of the preceding year of an undertaking.
• Infringements of the principles of processing inherent in the Regulation, the data subjects’ rights, the transfers of personal data to a recipient in a third country, any obligations pursuant to Member State law and pertinent to special processing situations, as well as non-compliance with an order or a temporary definitive limitation by the supervisory authority are subject to administrative fines up to 20 000 000 EUR, or up to 4 % of the total worldwide annual turnover of the preceding financial year of an undertaking.

The aforementioned amounts are the upper limits of administrative penalties to be imposed. Depending on the specific infringement and the ratio between due care and care actually exercised, the amounts of administrative fines may vary greatly. Different circumstances weigh in when assessing amounts. For instance, in case of infringement of several provisions of the Regulation for the same or linked processing operations, the total amount of the administrative fine shall not exceed the amount specified for the gravest infringement. In case of a minor infringement or if the fine likely to be imposed would constitute a disproportionate burden to a natural person, a reprimand may be issued instead of a fine.

This raises the question of the criteria for setting the amounts of fines. The Regulation allows for a number of interpretations, but the Article 29 Working Party considers that assessment must depend on the degree of interference and remedy needed for any wrongful conduct or on whether any such interference or remedy is dissuasive or punitive in nature.

So far as the general rules and conditions for imposing administrative fines are concerned, those are detailed in Article 83 of the Regulation. A key element is the requirement to impose effective and proportionate fines. Such fines may be settled based on a number of circumstances such as:

• The nature and duration of infringement;
• The purpose of the processing concerned as well as data categories affected thereby. Certain special data categories, such as the ones revealing racial or ethnic origin, political opinions and religion are subject to higher protection[1];
• The circumstances surrounding the infringement, namely if it is of intentional or negligent character;
• The degree of responsibility of the controller/processor when establishing the infringement and upon termination thereof. Notification to the supervisory body and cooperation with the supervisory body in order to mitigate the infringement constitute mitigating factors;
• Any other mitigating or aggravating factors also matter, such as previous infringements, financial benefits from the infringement, etc.

The amounts of fines imposed to undertakings may be significant. It is, therefore, reasonable to specify what is meant by “undertaking” in the Regulation. Here the legislator refers to Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

Although not explicitly defined therein, the term is given a broader interpretation in the case law of the Court of Justice of the EU, and according to it, for the purposes of Articles 101 and 102, the term “undertaking” is to be understood as an economic unit that may consist of a parent unit and any subsidiaries thereof. Any structures where one company exerts control over another company, whereby both companies are economically and organizationally related, shall constitute one undertaking. Such an interpretation of “undertaking” is likely to result in significant increase in the amounts of fines based on the total worldwide annual turnover of the entire corporate group, not the turnover of the specific business entity to have committed the infringement.

In conclusion, we would like to specify that the amounts of administrative fines discussed above and stipulated in the Regulation, are the upper limits of fines and sanctions that may be imposed in case of graver infringements. The Regulation reads that any case of infringement has to be subjected to extensive evaluation with due consideration of any mitigating or aggravating factors.[2] We would like to reiterate that due to the broad interpretation of the term “undertaking”, the annual turnover of the entire group of companies may be considered when determining the amount of the fine, thus significantly increasing thereof. That is why compliance with the requirements of the Regulation is of paramount importance.

THE TEAM OF DIMITROV, PETROV & CO.

[1] Articles 9 and 10 of the Regulation provide definitions of these special categories.

[2] Guidelines of the Article 29 Working Party on the application and setting of administrative fines for the purposes of the Regulation 2016/679.

Following our previous publications regarding the key points introduced by the GDPR, now we will focus on one of the new principles of data protection – transparency.

Transparency is a long-established feature of EU law which is all about engendering trust in the processes which affect citizens by enabling them to understand and, if necessary, to challenge those processes[i]. Transparency is intrinsically linked to fairness and the new principle of accountability under the GDPR. The principles of fair and transparent processing require that the data subject should be informed about the existence of the processing operation and its purposes.

Transparency allows data subjects to keep data controllers and processors accountable and to exercise control over their personal data. Transparency requirements apply regardless of the legal ground for processing and throughout the entire life cycle of processing. Transparency as a principle applies to the following three stages of the cycle of processing:

1) Before the processing – when providing information to data subjects in relation to the collection of their data and how these data will be processed;

2) Throughout the whole processing period – in the manners in which data controllers communicate with data subjects in relation to their rights under the GDPR;

3) In specific cases during the processing – e.g. in case of data breaches or substantial changes to the processing.

What is the meaning of transparency? The principle of transparency in general requires that any information and communication relating to the processing of personal data should be easily accessible and intelligible, and clear and plain language should be used. That principle concerns especially information on the controller’s identity and the purposes of processing that is provided to data subjects, as well as further information ensuring fair and transparent processing in respect of data subjects and their right to obtain confirmation of their personal data processing.

Natural persons should be made aware of the risks, rules, safeguards and rights in relation to the processing of personal data, and how to exercise their rights in relation to such processing.

Article 12 of the GDPR provides the requirements to the information provided to data subject in relation to the processing:

• it must be concise, transparent, intelligible and easily accessible;
• clear and plain language must be used;
• the requirement for clear and plain language is of particular importance when providing information to children – children merit special protection as they may be less aware of the risks and their rights in relation to the processing of personal data, so the information addressed to a child must be in such a clear and plain language that the child could easily understand it;
• It must be provided in writing or by other means, including where appropriate, by electronic means;
• Where requested by the data subject, the information may be provided orally (including by automated means like audio recording) – GDPR specifically requires that information may be provided orally on request provided that the identity of the data subject is proven by other means. This precondition applies only in relation to information provided under Art. 15 – 22 and Art. 34 of the GDPR. General information under Art. 13 and Art. 14 of the GDPR may be provided without the controller requiring the data subject’s identity to be proven[ii];
• It must be provided free of charge – controllers cannot charge data subjects for the provision of information. Exception may exist where requests from a data subject are manifestly unfounded or excessive (for example repetitive) – in these cases the controller can either charge a reasonable fee or refuse to act on the request. The controller shall bear the burden of demonstrating the manifestly unfounded or excessive character of the request.

The categories of information that must be provided are listed in Art. 13 and Art. 14 of the GDPR – these are basically details of the data controller, purposes, legal basis, processing time, information on the rights of the data subject, information on whether the provision of personal data is a legal or contractual requirement, and the consequences of a failure to provide data. A new requirement introduced by the GDPR is to provide information on the legal basis for the processing purposes – controllers should be able to relate each specific processing purpose to a specific legal basis. This actually means that controllers should be aware of the reasons for the processing of personal data and can properly identify the legal basis which is applicable to a particular purpose.

Besides the content, the form and manner in which information under Art. 13 and 14 of the GDPR should be provided are also important.  The information in relation to the processing of personal data should be provided to the data subject at the time of collection from the data subject, or, where the personal data are obtained from another source, within a reasonable period, depending on the circumstances of the case, but not later than 1 month. With a view to these requirements, controllers should develop mechanisms to inform data subjects within the specified time limit whenever they collect and store information that is not received from the data subjects themselves, but is obtained from the Internet, a public register, etc.

Information about the processing should be provided separately from any other information – in practice, separate documents should be prepared (declarations, notices, privacy policies, and etc.). The Art. 29 Working Party, an EU data protection advisory body, advises on using layered privacy statements and push/pull notices^[iii]. Information which must be provided to data subjects can also be provided in combination to standardized icons allowing the controller to give a meaningful overview of the intended processing. Where the icons are presented electronically, they should be machine-readable.

In conclusion, we should summarize that the principle of transparency requires providing information to data subjects with regard to every personal data processing, which guarantees their right to be aware of the process and challenge it if needed. Exceptions to this requirement are very limited – where the data subject already has the information or where providing the information proves impossible or would involve a disproportionate effort.

Duly documenting how the principle of transparency is guaranteed becomes even more important in the context of the new principle of accountability according to which controllers carry the burden and must at all times be able to demonstrate compliance with the GDPR requirements. Therefore, it is advisable for all companies to develop mechanisms to ensure the compliance with the transparency requirement – the development of appropriate tools (privacy policies, communications, declarations) as well as procedures for informing the subjects (e.g. in case of breaches of the data security).

TEAM OF DIMITROV, PETROV & CO.

[i] Guidelines on transparency under Regulation 679/2016 of Article 29 Data protection working party (project), p. 5

[ii] Guidelines on transparency under Regulation 679/2016 of Article 29 Data protection working party (project), p. 11

[iii] Guidelines on transparency under Regulation 679/2016 of Article 29 Data protection working party (project), p. 17-18.

Dear clients and partners,

Again with GDPR in mind, we will examine consent as one of the six legitimate grounds for data processing.

By paying a lot of attention to the Regulation, partially due to the high fines it introduces, the media has provided a wide coverage of GDPR issues and key terms, including ‘consent’.

What do we know about consent so far? It is well-known that in order to be valid, consent should be:

• freely given – the data subject should have a genuine and free choice and be able to refuse or withdraw consent without detriment;
• specific – consent should refer to clear purpose and specified term for processing as well as to defined persons who will have access to the data;
• informed – the data subject should be informed at least of the identity of the controller and the purposes of the processing;
• unambiguous – it is necessary that consent is provided through a clear affirmative action – a statement or an act clearly showing that the data subject agrees to the processing.

Having briefly outlined these main features of consent validity, this publication will focus on further key aspects of the use of consent as а legal ground for processing, which are not as familiar, but which require some particular attention.

The meaning of consent as a ground for processing should not be taken too far, nor should its use be considered a panacea. There are a few reasons for that.

First, consent is only one of the six grounds for processing and its application is limited in case any of the other five legal grounds applies. For instance, consent should not apply when processing is required for the purposes of a contract. In such cases, using consent as grounds for processing is neither required, nor desirable. Remember – consent may be withdrawn! What would happen to contractual relations then…

Second, according to the understanding of the Working Party under Art. 29 (WP29), a processing activity for a specific purpose cannot be based on multiple lawful grounds. In this sense, when we process data on the grounds of consent, we cannot combine or “strengthen” consent with another legal basis, just in case the data subject withdraws their consent. Besides, if we have already started processing data on the grounds of consent, we cannot change those grounds later on. The reason is again the fact that consent may be withdrawn – a hypothesis that is non-existent with regards to the rest of the legal bases for processing.

Third, consent as a ground for processing depends on the context in which it is given. GDPR pays a special attention to the imbalance in the relations between the personal data controller and the data subject. Labour relations are just one of the many examples of such an imbalance. There is hardly a company not facing the issue of ensuring compliance of labour relations with the Regulation’s requirements. How much can we rely on consent in this context?

According to WP29, consent cannot be used as a legitimate ground here. The reason is in the imbalance between the parties and the impossibility for the employee, who constitutes a data subject, to make a free choice under fear or discomfort of potential adverse effects, which contradicts one of the main requirements for the validity of consent – the free choice.

The same example can be given with respect to the relations in which the controller is a public authority. In this case again it cannot be assumed that the data subject makes a realistic choice on whether to give their consent or not, insofar as the other party is in fact the stronger one. Such relations are marked by an obvious inequality in the context of which consent would not be valid.

Any type of influence or pressure on data subjects is considered to be an obstacle to making a free choice that deprives consent of validity and processing – of lawfulness. The controller should be able to prove at any time that consent is obtained without any threat of potential adverse effects in case of refusal.

Fourth, consent should be given separately for each and every purpose of processing. Even if the purpose recurs in certain periods of time, it is recommendable to renew the consent and inform the data subject of the processing again. It should not be assumed that once consent for processing for a particular purpose is given, it will be sufficient for subsequent data processing for other purposes.

Finally, if you imagine that obtaining consent involves some sophisticated terminology and complex language, you can relax. The information provided for the purpose of obtaining data subject consent should be simple and easy to understand by the average citizen. In this sense, exquisite legal style is in no way useful according to the GDPR.

In conclusion, we will highlight a key aspect of consent that will prove to be particularly beneficial to the online business environment – there is no legislative requirement for consent to be obtained in writing. Various techniques, particularly those related to IT solutions, would allow for consent to be accepted as explicit and therefore valid. The European legislator has provided data controllers with the opportunity to obtain consent through various manners and means, including by ticking a checkbox upon visiting a website, adjusting online service settings, etc.

THE TEAM OF DIMITROV, PETROV & CO.

In the light of the new Regulation (EU) 2016/679 (GDPR) concerning personal data protection that shall apply as of May 25, 2018, MERITAS – a leading global network has prepared a short informative video to illustrate recommended steps to companies in order to ensure GDPR compliance.

The preparation process is divided into three major stages:

• Discovery/audit of the personal data processing practices applied in the organization;
• Gap analysis;
• Development and implementation of internal policies and procedures that correspond to GDPR requirements.

As a global legal network, MERITAS has a cross-border Data Protection Group that brings together leading experts in the field from the member law firms across EU. Their collaboration allows them to resolve their clients’ domestic and international data protection issues.

Dimitrov, Petrov & Co. is the exclusive member of MERITAS for Bulgaria since 2005 and is also actively preparing its customers for ensuring compliance with the GDPR requirements.