GDPR Compliance for Small Businesses: Practical Steps and Considerations

In May 2018, the General Data Protection Regulation (GDPR) came into force, fundamentally changing the way businesses handle and process personal data within the European Union (EU) and the European Economic Area (EEA). For small businesses, ensuring GDPR compliance is not merely a legal obligation but a trust-building mechanism with customers. This blog article will delve into the practical steps and considerations small businesses must take to ensure they comply with GDPR, offering actionable guidance to simplify this complex process.

Table of Contents

Understanding the GDPR

The GDPR aims to give individuals more control over their personal data and to unify privacy regulations across EU member states. It applies to any business, regardless of size, that processes the personal data of individuals within the EU. It also affects non-EU businesses if they offer goods or services to individuals within the EU or monitor their behaviour.

At the heart of GDPR are several key principles concerning personal data. These include:

Lawfulness, fairness, and transparency – Data must be processed in a lawful, fair, and transparent manner.
Purpose limitation – Personal data must be collected for specified, explicit, and legitimate purposes.
Data minimisation – Only the necessary data for the intended purpose should be collected.
Accuracy – Data must be accurate and kept up to date.
Storage limitation – Personal data should not be retained longer than necessary.
Integrity and confidentiality – Personal data must be processed securely.
Accountability – Organisations must be able to demonstrate their compliance with the GDPR.

These principles inform every aspect of GDPR compliance and underpin the practical steps small businesses need to take to adhere to the regulations.

Conduct a Data Audit

The first practical step towards GDPR compliance is conducting a thorough data audit. For small businesses, this may seem daunting, but it is a necessary step to understand what personal data your business holds, where it is stored, and how it is processed.

Identify the types of data collected: Begin by identifying the personal data you process. Personal data can include names, email addresses, phone numbers, IP addresses, and any other information that can be used to identify an individual. Special categories of data, such as health information, sexual orientation, or political opinions, require additional protection under GDPR.

Assess data flow: Map out how personal data flows through your organisation. This includes how data is collected, used, shared with third parties, and ultimately disposed of. Understanding this flow is crucial to identifying potential areas of non-compliance and improving data management practices.

Review data storage practices: Ensure that data is stored securely and that only authorised personnel have access to it. This may involve reviewing the physical and digital security measures in place, such as encryption, password protection, and restricted access.

Legal Basis for Processing Data

GDPR requires businesses to have a legal basis for processing personal data. There are six lawful bases, but the most relevant for small businesses are:

Consent: The individual has given clear consent for you to process their personal data for a specific purpose.
Contract: Processing is necessary to fulfil a contract you have with the individual, or because they have asked you to take specific steps before entering into a contract.
Legal obligation: Processing is necessary to comply with the law.
Legitimate interests: Processing is necessary for your legitimate interests or the legitimate interests of a third party, provided these interests do not override the individual’s rights and interests.

Consent is one of the most commonly used legal bases, especially for marketing activities. However, GDPR has strict rules around obtaining consent. Consent must be freely given, specific, informed, and unambiguous, and individuals must have the ability to withdraw consent easily.

Create a Privacy Policy

A comprehensive and transparent privacy policy is essential for GDPR compliance. Your privacy policy should clearly explain what personal data you collect, why you collect it, how it is processed, who it is shared with, and how long it is retained.

Key elements to include in your privacy policy are:

Data Controller: Identify your organisation as the data controller responsible for the personal data you collect and process.
Types of Data Collected: List the types of personal data your business collects, such as contact details, payment information, or cookies.
Purpose of Data Processing: Explain the purposes for which you process personal data, whether for fulfilling customer orders, sending marketing emails, or improving your website’s functionality.
Legal Basis for Processing: Specify the legal basis for processing personal data, whether it is consent, contractual obligation, or legitimate interests.
Third-Party Sharing: If you share personal data with third parties, such as service providers or partners, this must be disclosed, and the reasons for such sharing should be explained.
Data Retention: Clearly state how long personal data will be retained and the criteria used to determine this period.
Data Subject Rights: Inform individuals of their rights under GDPR, including the right to access, rectify, erase, or restrict the processing of their personal data.

The privacy policy should be written in clear, plain language and be easily accessible to individuals, such as via a link on your website.

Data Subject Rights

GDPR grants individuals a range of rights concerning their personal data, and small businesses must have mechanisms in place to respect and fulfil these rights. The key data subject rights include:

Right to access: Individuals have the right to request access to the personal data you hold about them.
Right to rectification: Individuals can request the correction of inaccurate personal data.
Right to erasure: Also known as the ‘right to be forgotten’, this allows individuals to request the deletion of their personal data under certain circumstances.
Right to restrict processing: Individuals can ask you to restrict the processing of their personal data in certain situations.
Right to data portability: Individuals can request that their personal data be provided in a structured, commonly used format so they can transfer it to another data controller.
Right to object: Individuals have the right to object to the processing of their personal data for certain purposes, including direct marketing.

Small businesses must have processes in place to respond to these requests promptly. Under GDPR, you must respond to requests within one month, although this can be extended by a further two months in complex cases. It’s important to note that these rights are not absolute; there may be circumstances where you can refuse a request, but the individual must be informed of the reasons for the refusal and their right to complain to the relevant supervisory authority.

Appoint a Data Protection Officer (DPO)

While small businesses are not always required to appoint a Data Protection Officer (DPO), it can be beneficial to do so. A DPO is responsible for overseeing data protection strategies, ensuring compliance with GDPR, and acting as a point of contact for data subjects and supervisory authorities.

Under GDPR, a DPO must be appointed if:

Your core activities involve large-scale processing of special categories of data (e.g., health data).
You systematically monitor individuals on a large scale.

For most small businesses, these criteria may not apply, but appointing a DPO, even on a voluntary basis, can help ensure compliance and reduce the risk of data breaches.

Implement Data Security Measures

Data security is a critical aspect of GDPR compliance. Small businesses must take appropriate technical and organisational measures to protect personal data from unauthorised access, loss, or destruction. Here are some practical steps to improve data security:

Encryption: Encrypt personal data both at rest and in transit to protect it from unauthorised access.
Access Controls: Implement strict access controls to ensure that only authorised personnel have access to personal data.
Regular Software Updates: Keep all software, systems, and applications up to date to mitigate vulnerabilities that could be exploited by cybercriminals.
Data Backup: Regularly back up personal data to ensure it can be recovered in the event of data loss or a cyberattack.
Training and Awareness: Provide GDPR training to employees to ensure they understand their responsibilities regarding data protection and security.
Data Breach Procedures: Have a clear procedure in place for responding to data breaches, including notifying affected individuals and the relevant supervisory authority within 72 hours of becoming aware of the breach.

Third-Party Processors

Many small businesses rely on third-party service providers, such as cloud storage providers, payment processors, and marketing platforms, to process personal data. Under GDPR, businesses remain responsible for ensuring that third-party processors comply with data protection regulations.

When working with third-party processors, small businesses should:

Conduct Due Diligence: Ensure that the third-party provider has appropriate security measures in place and is GDPR-compliant.
Use Contracts: Put in place written contracts with third-party processors that outline their data protection responsibilities and require them to act only on your instructions.
Audit Providers: Regularly review and audit your third-party providers to ensure continued compliance with GDPR.

International Data Transfers

If your business transfers personal data outside of the EEA, you must ensure that the recipient country provides an adequate level of data protection. GDPR restricts the transfer of personal data to countries outside the EEA unless specific safeguards are in place, such as:

Adequacy Decision: The European Commission has determined that the country provides an adequate level of protection.
Standard Contractual Clauses: Use of standard data protection clauses adopted by the European Commission.
Binding Corporate Rules: These are legally binding rules approved by a supervisory authority that apply to international transfers within a corporate group.

For small businesses using cloud services or other third-party providers based outside the EEA, it’s essential to ensure that these providers comply with GDPR requirements for international data transfers.

Regular Review and Updates

GDPR compliance is not a one-time task but an ongoing process. As your business evolves and your data processing activities change, it’s crucial to review and update your data protection practices regularly.

Annual Data Audits: Conduct an annual data audit to ensure that the data you collect, process, and store is necessary and relevant for your business operations.
Policy Updates: Update your privacy policy and data protection procedures to reflect any changes in your data processing activities or legal requirements.
Staff Training: Regularly provide data protection training to your staff to ensure they remain aware of their responsibilities and any new GDPR requirements.

Penalties for Non-Compliance

The GDPR has significant penalties for non-compliance, which can be particularly damaging for small businesses. Fines can be up to €20 million or 4% of annual global turnover, whichever is higher. However, the severity of the penalty depends on the nature and seriousness of the breach. Minor infringements may result in warnings or lower fines.

In addition to financial penalties, non-compliance can damage a business’s reputation, leading to a loss of customer trust and potential legal action from individuals whose data has been mishandled.

Conclusion

For small businesses, ensuring GDPR compliance may seem like a daunting task, but with the right approach, it can be manageable. By conducting a data audit, ensuring a lawful basis for processing data, implementing security measures, and respecting data subject rights, small businesses can not only comply with GDPR but also foster trust with their customers.

GDPR compliance should be seen not just as a regulatory requirement but as an opportunity to improve data management practices, protect customer privacy, and enhance your business’s reputation. Ultimately, a strong commitment to data protection can provide a competitive advantage in today’s privacy-conscious world.