The recent high-profile decision by the European Court of Justice involving Google has highlighted the existence of stringent data privacy laws in the European Union (EU). However, although the Google decision was groundbreaking insofar as it concerned a requirement that a search engine remove links to “irrelevant” or “outdated” information published by third parties (which could themselves continue to publish that information) it is only the application of the law that is new. The principles of relevance and accuracy themselves are fundamental principles of the Data Protection Directive 95/46/EC as implemented in the United Kingdom by the Data Protection Act 1998.

Many employers in the United States are not aware of their responsibilities in relation to “personal data” related to their EU-based employees. In this article, the first in a series of three that covers the parameters of data privacy law in the UK for employers, we consider the first five (of eight) data protection principles to the Data Protection Act. In the second article, we look at the last three data protection principles, in particular the restrictions on the transfer of data outside the EU. In the final article, we will look at the practical application of this law on the issue of employment background checks and monitoring.

The system of data protection in the UK is founded on the application of eight principles to the processing of personal data. “Personal data” is information that identifies a living individual—this law does not protect corporations—and “processing” includes any action that you can think of, including obtaining, deleting, utilizing, or just retaining personal data. “Sensitive personal data” is a special category covering information such as health, trade union membership, racial origins or sex life; tougher conditions are attached to the use of such information.

Below are the first five data protection principles:

  • Fair and lawful processing. Personal data must be processed “fairly and lawfully” in accordance with a number of rules, which can include the requirement that the consent of the employee be obtained before the employee’s data is processed. That consent is not required in every case, however, such as when a legal requirement exists to transfer the data (for example, to submit information to the tax authorities) or when there is a legitimate business reason for doing so (in relation to handling most personnel records, for example). Employers are required to tell their employees what information they (the employers) will hold and how they will use it. For this reason, the employment contract should include a data protection policy or a statement.
  • Specified and lawful purposes. Personal data may only be obtained and further processed for one or more specified and lawful purposes, so an employer must be able to demonstrate and justify what those purposes are. This is particularly relevant in relation to background checks and will be further explored in the third article in this series.
  • Adequate, relevant and not excessive. The personal data accessed must not be greater than is needed for the lawful purposes for which it is obtained and must not be irrelevant. Employers therefore need to think carefully about whether they need the information they obtain and whether they can justify retaining that information.
  • Accurate and up-to-date. Personal data shall be accurate and, where necessary, kept up-to-date. According to the ruling of the European Court of Justice, this is where Google fell down, but it is also a difficult area for employers. Should an expired warning in a personnel file be considered out-of-date and therefore be disposed of? Arguably it could be retained throughout the employment in order to have a complete picture of someone’s service. Some, however, would interpret this requirement to mean that the warning must be removed once no longer “live.”
  • Not kept longer than necessary. This principle is self-explanatory, but can cause problems for employers, especially in relation to health information or old appraisals. Employers need to think about how long they actually need to retain information based on the likelihood of needing it again, and the justification for doing so.

These basic principles are supplemented by voluminous guidance from the regulator, the Information Commissioner, in the form of the Employment Practises Code (which stretches to 96 pages), supplementary guidance to the Code (86 pages) and specific guidance on areas ranging from the use of closed circuit television (CCTV) to electronic communications and “bring your own device” policies.

If you employ staff in the UK, it is necessary to understand the core requirements of the Data Protection Act, as well as the laws in other EU jurisdictions, many of which have more onerous obligations than in the UK (although the EU-wide Data Protection Directive ensures a degree of uniformity between jurisdictions). The penalties for a breach of the rules, while likely to be less in an employment context than in respect of customer data, also include the risk of reputational damage that may sometimes be a greater harm to your company than the penalties themselves.

In part two of our three-part series on the data privacy laws in the UK, “Data Privacy Law in the UK, Part II: Data Security and Restrictions on Data Transfers for U.S. Employers,” we will discuss three data protection principles, in particular the restrictions on the transfer of data outside the EU.

Justin T. Tarka is an associate in the London office of Ogletree Deakins.


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