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Data Protection Officers are under the spotlight in the European Data Protection Board’s latest coordinated enforcement action

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Since 25 May 2018, there is hardly a company that has not had to deal with a Data Protection Officer, or DPO. It has been 5 years since the Regulation (EU) 2016/679 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 and on the free movement of such data, and repealing Directive 95/46/EC („General Data Protection Regulation”; hereinafter: “GDPR“) came into force, but this does not and cannot mean that “the machine is running, the creator rests.” In view of the continuous development of case law, a review of the regulations may be necessary from time to time.

In 2023, the European Data Protection Board (“EDPB“) decided to conduct a coordinated enforcement action focusing specifically on the designation and operation of DPOs. The coordinated action involves 26 European data protection authorities.

The Data Protection Officer is responsible for protecting the rights and freedoms of data subjects and ensuring compliance with data protection rules. Impartiality and independence are among the requirements for DPOs that most often come to the attention of the authorities. Impartiality and objectivity ensure that the officer is able to closely monitor data management processes, effectively manage data breaches and advise the organisation on compliance with the GDPR and other relevant data protection rules. Impartiality guarantees that the DPO represents data protection issues of all interested parties, be it the employees, contractors, or the management of the organisation. The DPO shall be an expert who has no interest in the organisation or its data processing activities. Conflict of interest also means that the appointed data protection professional must not be in a position or engage in an activity that could jeopardise objective and independent decision-making.

A number of decisions on DPOs have been taken by national authorities in previous years, with the following conclusions:

  • The DPO must not only be registered with the competent authority of the mother company, but the organisation must also notify other relevant authorities if the organisation has other branches and the DPO can operate there too.
  • It is not possible to hire an external company as an outsourced DPO and at the same time also appoint a third party as DPO.
  • If the DPO is in charge of compliance, audit and risk management, the independence or impartiality of the role may be compromised.
  • The DPOs are not allowed to engage in a role as the controller’s representative before the data protection authority, as this could jeopardize the impartiality or independence of the DPO.
  • The DPO can be withdrawn if the DPO no longer has the appropriate professional skills or fails to comply with data protection regulations.
  • The DPO cannot be ordered, and therefore it is a breach of the GDRP if the DPO cannot act on his or her own, but only on the instructions of the head of the company (or any other person with the right to make decisions in the company).

A control plan may formalise the DPO’s procedure, but a direct instruction does not comply with the GDPR.

  • It is also a breach of the GDPR to have several hierarchical levels between the DPO and the senior management of the organisation because this way the DPO is no longer directly accountable to the management.
  • It is not an appropriate solution if the DPO is appointed, but the DPO also performs compliance functions in the company, thus compromising independence and impartiality. The authority in the case confirmed that the DPO cannot perform a role that allows him or her to determine the purposes and means of processing personal data.
  • Similarly, it has been held to be contrary to the prohibition of conflicts of interest, if the DPO is also a managing director of two subsidiaries which are responsible for processing data for the main company. In this case there is a conflict of interest because the DPO supervises the adequacy of the data processing tasks, while having a legitimate interest in the profits and operations of the data processing companies.

As the EDPB will focus on DPOs in its coordinated enforcement actions in 2023, we can expect to see a growing number of decisions in which the determining data protection authority makes decisions in principle on the functioning and impartiality of the DPOs. Further guidelines or statements may be issued by national or EU authorities.

Practical problems with cookie data management

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Introduction

In today’s digital world, methods and technologies for collecting and processing personal data (e.g. cookies) are extremely widespread because they allow data controllers to learn essential information about us. For example, after a single search for a shoe on the Internet, we are almost inevitably confronted with advertisements for the same or similar shoes on other platforms.

The relationship between data controllers and individuals is fundamentally unequal, as average users are typically unaware of the many ways in which their personal data are handled. To balance this, Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector (“ePrivacy Directive“) and Regulation 2016/679/EU on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (“GDPR“) were adopted to ensure privacy and the protection of personal data. These EU laws set out minimum requirements for data controllers to compensate for asymmetric relationships.

NGOs such as None of Your Business (“NOYB“) are helping to ensure that these rights are effectively enforced. As a result of NOYB’s work the European Data Protection Board’s Cookie Banner Taskforce has published its newest report. In this, the Taskforce has identified 7 main cookie management practices which it considers to be inadequate in the light of the relevant legislation. These are briefly summarized below in order to help website operators to adapt their practices and users to be more aware of them:

No reject button on the first layer: It does not meet the requirements for consent if the information window on cookies that require consent only offers the option “accept” or “more information”, but without containing a button to reject the cookies.

Pre-ticked boxes: Indeed inadequate to pre-tick the boxes from the available options that the data controller prefers when setting cookies.

Use of a link: The accept button for cookie-related data management typically pops up automatically on all pages, but some data controllers provide the rejection option only through a separate link, making it difficult for users to make a voluntary choice and putting pressure on them.

Deceptive button colours and contrast: For valid consent it is also an important factor how the possibilities are visually represented. Indeed, if the colour or contrast of the buttons displayed is misleading for the data subject (e.g. if, in addition to the clear display of the accept button, the contrast between the colours of the reject and additional options button is so minimal that the text is almost unreadable), the consent given will most likely be considered invalid. Of course, this should always be considered on a case-by-case basis.

Misrepresentation of the legal basis: It is not lawful for the site operator to base data processing first on the consent of the visitor or, in the absence of consent, on legitimate interest. In this respect, it is particularly unlawful where the user has no possibility to object to the consent, given that in the absence of consent, the controller will process the data on the basis of his legitimate interest, as this may give the impression that the data subject can only consent to the processing and has no other choice.

Inaccurately classified “essential” cookies: The Taskforce has highlighted in its report, that many data controllers classify cookies as essential or strictly necessary, that in fact shall not be considered as essential.

No withdraw icon: A further requirement for consent is that it should be revocable at any time, in the same simple way as it was given by the data subject. Thus, data controllers should also provide for this possibility in relation to cookies (e.g. by placing a floating revocation button or link).

Summary

As can be seen from the above, data controllers must act in such a way as to ensure that users have access to the right information and are thus put in a position to make decisions. Of course, it is the responsibility of the data subjects to actually inform themselves and thus act and make decisions as informed users with regard to their own data (e.g. by customizing their preferences, leaving the visited pages after use, reading the NAIH’s information notices, the controller’s privacy policy).

New guidelines of the EDPB on data controllers and data processors

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The European Data Protection Board (“EDPB” or “Board”) has adopted the final version of guidelines no. 07/2020 on the concepts of controller and processor in the GDPR on its meeting of 7 July 2021, which renews and replaces the previous guidance no. 1/2010 of the Article 29 Data Protection Working Party on the same subject.

The definition of roles of data controller and data processor has been and continues to be the most controversial issue of data protection law, both during and prior to the entry into effect of the GDPR, as the assumed role determines the obligations and thus the corresponding responsibility. For this reason, the new EDPB guidelines are essential for all actors involved in data processing activities.

  1. Identifying the data controller

According to the GDPR, the person determining the purposes and means of the processing of personal data shall be considered the data controller. Among the elements of the concept, the new guideline explained the means of data processing in most detail, implementing a sharper distinction compared to the previous guidance.

In the opinion of the Board, when identifying the data controller, the means of data processing shall be understood only as the essential means, which are the following:

  • type of personal data which are processed
  • duration of the processing
  • the categories of recipients with access to the data (including transfers of data)
  • the categories of data subjects

The EDPB also emphasizes that actual access to personal data is not a requirement to be considered the data controller.

  1. Identifying the data processor

According to the GDPR, the data processor is the person who performs the processing operations on behalf of the data controller. The EDPB identified two explicit and one implied condition for the identification of the data processor. The two explicit conditions are as follows:

  • The data processor is a separate entity from the data controller;
  • The processing operations are performed solely on behalf of the data controller and the data are not processed for any purpose or interest other than those of the data controller.

In addition to the above, the third implied condition is that the discretion of the data processor includes the choice of non-essential means of data processing, such as the location of data storage, the software and methodology used for data processing operations.

There must be a written contract between the data controller and the data processor regarding the data processing, the absence of a contract constitutes an infringement of the GDPR on part of both actors.

The EDPB emphasized that the GDPR also imposes stricter obligations on data processors compared to the previous regulation. In addition, in the data processing agreement, the data controller may indirectly hold the data processor responsible for the performance of the data controller’s obligations under the GDPR, therefore, in order to limit the data controller’s liability, the most important thing is to select a responsible data processor, and conclude a processing agreement which duly takes into account all responsibilities.

  1. A person under the direct control of the data controller or data processor

Compared to the concepts of data controller and data processor, the role under the direct control of the data controller or data processor set out by Article 29 of the GDPR is less frequently discussed, but in practice the majority of natural persons perform data processing operations in this capacity.

This category includes a person who is not separate from the data controller or data processor. For example, neither the managing director nor a department of the company can be considered a separate entity from the company.

This category also includes a person who, although carrying out processing operations on behalf of the controller, has no independent decision-making power over these operations at all. Directly under the direct control are mainly workers and employees, but it is important to note that from the point of view of data protection law, not only workers employed under the Labour Code should be considered as employees, but also, where appropriate, staff employed under a service or agency contract.

When identifying direct control, in addition to the type of legal relationship, it is therefore necessary to examine the decision-making rights of the individual, his or her integration into the organization of the data controller or data processor, and the control exercised by the data controller or data processor.

For persons under direct control, the GDPR contains a single requirement that personal data may not be processed contrary to the instructions of the data controller. It is also possible and recommended in case of the persons under direct control to impose the obligations of the GDPR, as well as to sanction any conduct that infringes data protection law, in a contract or internal regulations.

Should you have any questions regarding the above, feel free to contact us.

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President of HDPA tempers position on thermometers!

Company groups, Data protection, Employment, labour law, Medium-sized companies, News, Start-ups / / , , , ,

The Head of the Hungarian Data Protection Authority in his interview made an announcement contrary to the Authority’s previous official position.

Unlike in Spring, in the current epidemiological situation in Hungary it is no longer disproportionate to implement body temperature measurement as a general measure, however, recording the results is still considered unjustifiable, because as health related data it would be considered a special category of personal data which should be especially protected.

The Head of the Hungarian Data Protection Authority in his interview made an announcement contrary to the Authority’s previous official position, that unlike in Spring, in the current epidemiological situation in Hungary it is no longer disproportionate to implement body temperature measurement as a general measure, however, recording the results is still considered unjustifiable, because as health related data it would be considered a special category of personal data which should be especially protected.

As a reminder, the Authority’s guidelines issued on 11 March 2020 and its confirmatory official position issued on 28 April 2020 considered disproportionate the requirement of screening tests with any diagnostic device (in particular, but not exclusively, with a thermometer), as the epidemiological situation in Spring did not warrant such measures.

The HDPA president’s statement did not affect the rest of the previously issued guidelines and official position, therefore all data processing in connection with the novel coronavirus epidemic such as body temperature measurement may only be introduced in the legitimate interest of the employer, substantiated by a proportionality test and the measurement shall be conducted by healthcare professionals or under their professional supervision under Article 9 (3) of the GDPR.

The Authority invariably requires employers to prefer measures which do not require the processing of personal data (basic hygiene, provision of disinfectants, adequate cleaning, provision of protective equipment, distance between workers).

Should you have any questions regarding the above, feel free to contact us.

GPDR after Brexit – Data transfers outside the EU

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After years of negotiations the United Kingdom has officially left the European Union, therefore the UK has become a “third country”. We would like to take this opportunity to point out the special rules concerning the UK and data transfers outside the EU in general.
Data transfer to the UK

As we have noted in our latest article on Brexit, some changes need time to enter into force. According to the withdrawal agreement concluded between the UK and the EU, there will be a transition period until 31 December 2020. In this transition period, the GDPR is still applicable in the UK, so the UK would not be considered as a third country until the end of this year.

What happens after the transition period?

It is very important to note that any data processed before the end of the transition period shall continue to be processed in accordance with the GDPR. Thus, personal data transferred to the UK during the transition period shall be guaranteed the same level of safety as currently provided by the GDPR and data subjects have no cause to worry about their right to privacy.

After the transition period, the UK and the EU still need to iron out the specifics of data protection. Certainly, for most data controllers that would be most convenient if the UK continued to apply the GDPR.

However, in the event of a “no-deal” Brexit or if the “deal” excludes data protection, the rules of transferring data outside the EU would have to be applied to the UK.

Data transfers outside the EU

One of the most emphasized general rule of the GDPR is that transferring data outside the EU is not allowed only with a very few exceptions. There are three categories of these exceptions, “adequacy decisions” in Article 45, “appropriate safeguards” in Article 46 and “derogations for specific situations” in Article 49.

Adequacy decisions

With regards to Brexit, the second best scenario would be an EU Commission adequacy decision. Data may be transferred without any special rules or authorizations to third countries deemed to provide an adequate level of data protection. While the decision falls to the discretion of the Commission, we expect this to be a very likely outcome, as the UK has high standards of data protection in their national legislation.

Appropriate safeguards

Should the UK not be found adequate, the next option is for the data controller or processor to provide appropriate safeguards. These safeguards are subject to the approval/ adoption of the Commission and/or the supervisory authority. The most relevant of these safeguards are as follows:

• binding corporate rules (BCR) of a corporate group (approved by the supervisory authority);
• standard data protection clauses (adopted by the Commission);
• standard data protection clauses (adopted by a supervisory authority and approved by the Commission);
• an approved code of conduct together with binding and enforceable commitments of the controller or processor in the third country to apply the appropriate safeguards, including as regards data subjects’ rights;
• an approved certification mechanism together with binding and enforceable commitments of the controller or processor in the third country to apply the appropriate safeguards, including as regards data subjects’ rights.

The abovementioned options require either significant effort from the data controller (i.e. drafting BCRs or codes of conduct) or a proactive supervisory authority (i.e. drafting and adopting standard clauses). Since the GDPR’s entry into force, no standard clauses have been adopted yet. Consequently, most data controllers might find appropriate safeguards a barrier too high to entry.

Derogations for specific situations

The last option is derogations for specific situations, to be applied for exceptional cases and will not serve as legal basis for systematic or regular transferring of personal data. The most relevant of these situations are as follows:

• explicit consent of a data subject informed of the risks of transfer to the third country;
• transfer is necessary for the performance of a contract between the data subject and the data controller or a contract concluded in the interest of the data subject;
• transfer is necessary for the establishment, exercise or defence of legal claims;
• transfer is necessary in order to protect the vital interests of the data subject or of other persons, where the data subject is physically or legally incapable of giving consent.

In any event, if the data controller uses these derogations as basis for data transfer outside the EU, the transfer may only take place if it is not repetitive and concerns only a limited number of data subjects, in addition the controller must demonstrate a compelling legitimate interest and inform the supervisory authority as well as the data subject. This is considered the least favourable option for data controllers because of their obligations to inform.

GDPR – One Year On

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As 25 May 2018 approached, many organisations faced these new European privacy rules with increasing concern. One of the main reasons for this was undoubtedly the extremely high fines that can be imposed for breaches of the GDPR: the majority of infringements can be punished by a fine of up to EUR 20 million or 4% of total worldwide annual turnover for the previous financial year (the higher of the two).
The level of fine imposed will depend on an assessment by the national data protection authority (DPA) of mitigating or aggravating circumstances listed in the GDPR including the nature, seriousness and duration of the infringement, whether the data involved was sensitive and any previous breaches.
A year on, with the first wave of decisions and fines now issued by a number of DPAs and investigations ongoing in others, it is interesting to examine the initial effects of the GDPR in the EU. Has it managed to enhance protection for people’s privacy? Did the concern expressed at its potential impact turn out to be justified? Are different trends emerging in different EU countries? These and other questions are discussed below.

Several companies involved in Hungarian Data Protection Authority (NAIH) procedures have been fined. The usual amount of the fine is between HUF 500,000 and HUF 1 million, (approximately EUR 1500 and EUR 3000).
In one of its most relevant recent decisions, the NAIH imposed a fine of HUF 1 million on a company with a turnover of HUF 15 million, which it considered a symbolic amount, for not restricting and issuing copies of camera recordings, despite a request from a data subject. The data subject wanted to use the recordings as evidence in legal proceedings, as stated in the request. The company justified its decision on several grounds, including the fact that the data subject did not indicate how deleting the recording would infringe his or her legitimate interest, and in connection with what legal proceedings he or she made the request (although required to do so under Hungarian law).
According to NAIH, the company violated the data subject’s right to restrict data processing. Under Article 18 (1) (c) of the GDPR, it is sufficient for the data subject to argue that restricting processing is necessary for the submission and enforcement of legal claims. There is no need to justify the right and the legitimate interest further than that. The conflicting Hungarian legal provision has been amended by the GDPR implementation law mentioned below.

In addition, the company failed to inform the data subject about the reasons for its decision and the legal remedies available to the data subject.
In imposing the fine, the authority assessed the nature of the infringement as an aggravating circumstance, as it violated the applicant’s rights. The refusal of the request also led to the deletion of the recordings, which cannot be restored. It was a mitigating circumstance that the company committed the infringement for the first time, and also that the conflicting national legal provision. was still in force, which could have misled the company in its decision to deny the data subject’s request.

Hungary has implemented the GDPR with an implementation act came into force on 26 April 2019. The aim of the amendments is the harmonisation of sectoral laws in order to apply the GDPR. The GDPR implementation act amends 86 acts to comply with the GDPR, including the Labour Code. As a result, employees’ documents, the processing of the criminal records and the agreements relating to the use of work-related IT equipment must be reviewed.
Experience has shown that the NAIH is active; several proceedings have been initiated checking the data processing practices of operators and assessing compliance.

GDPR „OMNIBUS” Act overwrites the usual HR process

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On 26 April 2019, Hungary’s new ‘Omnibus Act’ implementing provisions of the GDPR took effect. This article examines its significant impact on employers and the continuing uncertainty surrounding some of the changes it introduces.

Only a few months ago, employers were required to readjust their processes in preparation for GDPR implementation and now the new so-called ‘Omnibus’ act that amends the Labour Code, among other changes has entered into force (on 26 April 2019). The new regulation requires immediate and very significant work from HR departments, while there are several open issues to be jointly interpreted by labour lawyers together with HR and data protection professionals on how to ensure their daily practice is compliant with the new but ambiguous regulations.

The bottleneck is a result of the fact that Hungarian lawmakers were well behind schedule with implementation of GDPR, leaving employers only a few days to review the new processes, since all employers must comply with all requirements from day one. There is a strong hope that (as has happened in several previous cases) the Omnibus Act will very shortly be corrected by a new amendment.

The GDPR ‘Omnibus’ Act amends 86 acts including the Labour Code in order to comply with GDPR regulations.

This amendment requires the review of labour contracts, HR processes and significant HR policies such as recruitment, selection, new employees’ induction process, operations, the data management of access control systems and use of employer’s devices, just to mention the most common areas concerned.

Employers and all organisations should have complied with the new regulations within a couple of days of entry into force.

Although the new requirements contain more details than the published draft bill, there are still several open issues on how to implement them in practice. For example what is the meaning of, and what are the criteria for the necessity and proportionality test contained in the new regulations in relation to limitations on employees’ personal human rights (in connection with e-mail, internet, device or video surveillance, etc.)? The GDPR only includes the privacy impact assessment and the ‘balancing test’ for ‘legitimate interest’.

The usual process of recording a new employee’s data is basically overridden by the new rule that the employer may only request presentation of an ID card and other personal documents, but no copies can be made, even with the consent of the employee. This will mean that proper identification of the employee would be difficult. The provision of false data by the employee may result in annulment of employment, but with a lack of proper evidence and documentation, the employer may not be in a position to act.

Handling of criminal data records is more strictly regulated, and in the future the basic rule is that no criminal record clearance may be requested from employees. Exceptional and very strict criteria are set for cases when the employer may require an employee to present criminal record clearance, but the precise criteria can be decided by the employer if a serious business risk for the organisation would arise from an employee with undisclosed criminal record working for it.

Finally, the amendment relating to data managed by the biometric access control systems (digital fingerprint, iris/retina scanning, face identification systems), and also the use of the employers’ devices is based on new principles, meaning that a review of internal policies relating to these issues must be conducted.

Amendments with regard to the GDPR has been published

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The amendments with regards to the GDPR, which was adopted by the Hungarian Parliament on the 1st of April, was officially published today.

In order to harmonize with the GDPR, the amendments modifies over 80 sectorial law, including provisions of the Labour Code.

The majority of the amendments will come into effect at the end of April, but the modifications regarding the national accreditation and the protection of inventions by patents will come into force in May.

Legislative changes on the bill related to GDPR

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It became necessary with the entry into force and application of the GDPR, amend the domestic sectoral laws, which proposals are expected to be adopted by the Parliament this week. The draft also affects the provisions of the Labour Code.

Provisions related to workplace data management are defined under a new title Data Process after the section of protection of privacy rights. According to this, in addition to the employer, the works council and the trade union may also request employees to make a statement or to disclose any information for exercising their rights or fulfilling their obligations as defined in the Labour Code. In regard to the provisions above, they may also request to present them a document, thus, storing and copying them cannot be necessary for the above reasons, it is sufficient to present them and record the necessary data.

Based on the draft, the processing of biometric identifiers has been further regulated, that the employee’s biometric data can be processed for the purpose of identifying the data subject if it is necessary to prevent unauthorized access to a thing or data which would endanger the life, bodily integrity or health of the employee or others, or the serious or massive irreversible harm of a significant interest protected by law.

Regarding monitoring of the workplace, it has been recorded in the draft, surprising many people that the employee may only use the computing device provided by the employer for the purpose of performing the employment relationship. The parties may differ from this rule by mutual agreement, however, by default, these devices cannot be used by the employee for private purposes at all. Although the draft provides that the employer may only monitor employment-related data when monitoring, it also qualifies, for the purposes of the above entitlement, the data necessary to verify compliance with the private use restriction.

The provisions of the above draft have not yet been adopted, so we will inform you about its subsequent adoption or possible modifications later on.

NAIH imposed a fine of one million forints

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The Hungarian Data Protection Authority (NAIH) imposed a fine of one million forints on a company with a turnover of 15 million forints, which the Authority considered to be a symbolic amount of money, for not restricting and issuing copies of camera recordings, despite a request from the data subject.

The data subject wanted to use the recordings as evidence in legal proceedings, as he/she also stated in the request. The company justified its decision of not restricting and giving out a copy of the recordings because the data subject did not indicate how deleting of the camera recording would infringe his/her legitimate interest, and in connection with what legal proceedings he/she requests the restriction of processing data of the camera recordings, although it is required to do so according to the Act CXXXIII of 2005 on the private security services and the activity of private detectives (Szvmt).

According to NAIH, the company violated the data subject’s right to restrict data processing. According to Article 18 (1) (c) of the GDPR, it is sufficient for the data subject to argue that the restriction of the processing is necessary for the submission and enforcement of his legal claims. In this regard, Szvmt. is expected to be amended soon.

According to the opinion of NAIH, the company should have complied with the request of the data subject without consideration, since the reason stated by the data subject shall be sufficient to fulfill the request.

In imposing the fine, the Authority assessed the nature of the infringement as an aggravating circumstance, as it violated the applicant’s rights, furthermore, the refusal of the request has led to the deletion of the recordings, which cannot be restored. It was a mitigating circumstance that the company committed the infringement for the first time, and also that the provision referred from the Szvmt. is still in force, which could have misled the company in its decision to deny the data subject’s request.