Why Is GDPR Essential For Small Businesses?

With the EU’s General Data Protection Regulation now in place, UK is witnessing stringent regulations with tougher fines implemented, across all industries. GDPR is a compliance regulation that came into effect on the 25 May 2018. Thereafter within 6-8months down the timeline, only 30% of the EU based business became GDPR compliant. Despite being aware of the law and its implications, majority of the business still remains to be non-compliant. While most might think GDPR doesn’t apply to them if they are a small firm or a US-based firm, this isn’t necessarily the case. If people located in the EU can access your website, GDPR applies to you, irrespective of your company size or location.

Having said that, here is a look at GDPR’s most important principles and their implications on your small-scale business. This information will give you clarity on whether your business is exempted or not and its inferences.

What is GDPR?

The European General Data Protection Regulation (GDPR) is a compliance regulation and a data protection law built to –

• Protect an individual’s privacy. 
• Give the citizens and residents more control over their personal data. 
• Prevent misuse of personal data. 
• Unify regulation that stands across the European Union. 

It is important for business owners to bear in mind that, GDPR applies to any business established in the EU and may also be applicable to companies based outside of the EU who process personal data of EU citizens in any way. 

Understanding GDPR Compliance

• Businesses who are involved in ‘regular or systematic’ processing of personal data, or involved in processing large volumes of ‘special category data’ must abide to the GDPR Compliance.
•  GDPR Compliance is applicable to any business that processes personal data of EU citizens, including those companies having less than 250 employees and those companies who are based outside of the EU, who process personal data of EU citizens in any way. 
• Businesses or company owners who fall under this category are expected to appoint a Data Protection Officer (DPO) who shall ensure the company complies to the rules and regulations as stated under GDPR. 
• Failure to comply with the GDPR regulation will result in levying of harsh penalties. The penalties levied could be up to €20 million, or four per cent of annual turnover, whichever is higher
• In case of a breach of confidential data, the incident must be reported to the regulator (Information Commissioner’s Office) within 24 hours or at least within 72 hours with a report including information regarding what led to the breach, how it is being contained and their next plan of action
• As per the GDPR regulation, an individual has all the right to know how businesses use their data. The individual also holds the ‘right to be forgotten’ if they no longer want the company to process their personal data and the company will in this regard have no legal grounds to keep the data.

What constitutes a Special Category Data under Article 9?

As per the GDPR regulation “Special Category Data” is a personal data that is more sensitive and could put an individual at risk of unlawful discrimination if misused or disclosed without authorization. When processing the Special Category Data, businesses require to abide to the explicit legal rules in terms of obtaining explicit consent from the subject. Explicit consent may be through a signed form with a higher standard of consent. 

“Special Category Data” covered in the Article 9 of GDPR includes any Personal Data relating to-

• Race 
• Ethnic origin
• Political affiliation, 
• Religion, 
• Trade union membership, 
• Genetics, 
• Biometrics (where used for ID purposes),
•  Health, 
• Sexual orientation.

Data relating to criminal offense also comes under the Special Category Data, wherein businesses can only keep a “comprehensive register of criminal convictions” if they have legitimate grounds for the same and have GDPR compliant protections in place.

Penalties for Non-Compliance for GDPR 

• It has been clearly stated that non-compliance with GDPR will cost businesses a fine of up to €20 million or 4% of their global turnover, whichever is higher. However, these fines will only be applied in extreme circumstances. Although EU authorities will be able to impose fines on a discretionary basis, they can use other “corrective powers and sanctions” to encourage businesses to enhance GDPR compliance.
• The Other “corrective powers and sanctions” include issuing a warning, imposing a ban on data processing, ordering the rectification or deletion of data, and suspending data transfers to non-EU countries. 
• Stringent penalties will be imposed in case the company fails to comply with data collection rules for children, processing or sharing data without obtaining consent, and for maintaining data longer than its legal purpose. 
• Any non-compliant action or lack of action can result in a penalty. For this very reason, small businesses need to be aware of the GDPR requirements, especially focusing on the “Special Category Data” covered in Article 9 of GDPR.

Is GDPR regulation applicable to small business and sole traders 

To set the record straight and clear, GDPR applies to any or every business that deals with collection, or processing of personal data of people from the EU. This holds true whether you are a one-man operation business or a business having offices across continents. Having said that, one may not have to keep a written record of their data processing activities if they have less than 250 employees, and unless their data processing activities 

• Does not affect an individuals’ right and freedom.
• Data does not fall under the GDPR Article 9.
• The personal data does not fall under the Article 10 relating to criminal offences and convictions.
• The personal data processing activities are conducted on a regular basis. 

But by all means it is good to keep the records clear, even if one thinks they are exempt. Afterall, it is better to be safe than sorry. 

Implications of GDPR on small businesses

• Being a small business does not mean you are exempted from the GDPR Compliance. However, such businesses shall be recognized as businesses having fewer resources and pose less risk to data protection. In that case the business may see some leniency by the ICO in relation to penalty in non-compliance. 
• That apart, you would still want to ensure that your business is Compliant to the GDPR principles, for your business falls under the GDPR Compliance category for regular processing of personal data. 
• After all, it is much easier to follow the GDPR Regulation, than spend time figuring out how you can avoid Complying to the standards.
• It is important to note that if a company falls under one of the exemptions, but deals with a larger company that conducts large-scale processing, then in that case, you may be subject to the stringent GDPR’s Regulation.

Our expert view on GDPR Regulation on small businesses

It is very important for businesses to understand the spirit of GDPR. The legislation came into existence, having seen the way how personal data were misused. Most often companies treated personal data as a resource they could use without due regards to the rights of individual. Further, keeping aside the law, responsible data handling is a good business practices. As a business owner, you are responsible for your customers privacy and any kind of data breach could possibly crush your customers trust on you.

As an experienced professional of the industry, I believe GDPR shouldn’t be seen as a burden, but rather be seen as adding value to your business. By proving your potential and existing customers an assurance that your organisation is compliant with new law, you could win them into bringing in more business. After all, no one likes their data being lost, stolen, misused, or shared without proper consent. By being compliant and doing everything you can to protect your customers personal details, can help build a sense of trust which is also good for your business. I see it as a value addition to your business wherein the company is making an effort to protect client’s data and respects personal data, rather than letting it be used without any consent. 

Summary 

There are no two ways about it when it comes to the GDPR compliance for small businesses. While it affects every company in the world, be it small, medium or large-scale companies, the GDPR regulation is definitely seen as a positive step towards data protection. GDPR compliance has a positive impact on small businesses. Businesses have now taken their customers’ privacy more seriously. With this in place, businesses have seen more loyalty and increased trust from consumers. So, clearly, GDPR is now seen more than just as a bunch of rules to be followed to avoid penalties. By taking necessary measures to achieve GDPR Compliance, one can definitely position their business as one that truly cares for their customers and their private data.

This article originally published on the Globalmagzine

https://www.globalmagzine.com/why-is-gdpr-essential-for-small-businesses/