Navigating GDPR Compliance and EOR Client Obligations in 2023

GDPR is a global data privacy framework that prioritizes the protection of personal data protection and enforces strict data handling standards. An Employer or Record, or EOR, is a third-party service provider taking on the responsibilities of an employer ensuring cost-effective and compliant solutions for companies setting up distributed workforces.

A Basic Understanding of GDPR

In a world where digital information is everywhere, protecting personal data has become more important than ever. The General Data Protection Regulation, or GDPR,  which was put into effect in 2018 within the European Union and globally, is an important milestone in the age of data privacy, introducing clear guidelines on how to treat personal data carefully and transparently. The primary focus of GDPR is to protect the privacy and personal data of citizens within the EU, irrespective of where that data is used or stored. GDPR is a strict regulatory framework that dictates how companies manage and store personal data, how data breaches should be reported on and the penalties that may come into play in situations of non-compliance.

Navigating the regulatory and compliance landscape can be overwhelming and complex. Questions like "Who is responsible for what under GDPR?" are common. 

Using an Employer of Record (EOR) service like Playroll, can shield you from compliance risks associated with the employment of your workforce or contract talent. An Employer of Record takes on the compliance burden, which is why we pride ourselves on our commitment to upholding privacy and compliance.

This blog is designed to guide you through the ins and outs of GDPR responsibilities, equipping you everything you need to stay compliant in a complex and ever-evolving regulatory landscape.

GDPR Compliance: The Role of Employers of Record

An Employer of Record (EOR) serves as a third-party company which becomes the legal employer of a client companies workforce, including full-time employees, contractors, or remote workers. EORs manage employment and HR tasks including:

• Employment status of your employees and liability,
• Legal contracts through our legal partners,
• HR administration and documentation,
• Global payroll for your team,
• Salaries and benefits for your employees.

An Employer of Record is the go-between for a company and its employees, making sure that employees are hired compliantly in line with local laws and regulations and can streamline the intricacies involved with international employment, without needing to establish legal entities.

EOR Services and GDPR Guidelines

Employer of Record services frequently handle sensitive information, including payroll, taxes and HR information for customers and employees on a global scale. GDPR serves as a protective measure, ensuring that entities like Employer of Record services prioritise the privacy rights of employers' data protection. Let's explore the specific guidelines Employer of records need to follow to adhere to GDPR standards:

1. Permission and transparency: Under the GDPR mandate, EORs need to obtain explicit and informed consent from employees and customers to process their data, they also need to be made aware how their data will be used and the specific purpose it will serve.
2. Accountability and documentation: Under GDPR regulations,  Employer of Record services are required to document how they process data and the exact efforts, controls and measures that are put in place to adhere to these guidelines.
3. Cross-border data exchange: Because Employer of Record services operate on a global scale, cross-border transfer of data is common practice. To comply with GDPR guidelines, strict protocols need to be followed, to protect the data when it leaves the EU or EEA (European Economic Area).
4. Data access and transferability: Under GDPR employees have the right to access their personal data stored by EORs and request its transfer. EORs need to put processes in place to quickly handle these requests.
5. Data breach disclosure: In the event of a data breach, Employer of Record services are legally obligated to inform those impacted, including the relevant supervisory authority within the GDPR-stipulated time frames.

The Impact of GDPR on EOR Clients and Employees

GDPR has become an important framework that shapes how companies manage personal information, and for businesses that use Employer of Record services to manage their global workforce, GDPR is both a legal obligation and an essential element of ethical workforce management. 

The Responsibilities and Benefits of GDPR for EOR Clients

In the world of Employer of Record (EOR) services, GDPR compliance is about striking a balance between safeguarding data and cultivating trust to ensure both data security and competitiveness within the market. Let’s explore the responsibilities in more detail:

GDPR Responsibilities: Data Management and Processing

EOR Clients play an important role in maintaining GDPR compliance which involves careful data management, obtaining employee consent to process data and ensuring that the right systems and protocols are put in place for secure data transfer and security. Here’s a detailed list of the data management and processing responsibilities that businesses need to implement to remain compliant.

• Maintain a comprehensive record of all stored personal data. 
• Implement secure data transfer mechanisms, for cross-border data transfers.
• Embed privacy measures into the design of systems, products, and processes.
• Enable data subjects' rights, such rights access, correction and data deletion.
• Create an Incident response plan for data breaches.
• Conduct regular audits and assessments of security protocols and systems.
• Comply with GDPR regulation on cross-border data transfers.

GDPR Benefits: Risk Mitigation and Legal Protection

By adhering to GDPR, companies can proactively reduce the risk of legal hiccups, build trust among their workforce, enhance their reputation, and offer a competitive edge, particularly in areas where data privacy is top priority.

• Strengthens data security reducing the risk of data breaches.
• Encourages collecting only essential data, minimising processing risks.
• Ensures informed consent, reducing unauthorised data processing risks.
• Streamlines data subject rights, reducing the legal risk.
• Demonstrates a commitment to data protection through documentation, reducing legal ambiguity.
• Establishes trust with customers and stakeholders,  reducing reputation risks.
• Provides a competitive edge in markets where data privacy is a critical concern, appealing to privacy-conscious customers.

The Impact of GDPR Compliance on Employees

GDPR compliance significantly impacts employees by enforcing superior data protection measures, providing greater transparency in how data is processed and managed - giving employees enhanced control over their personal data. Companies that adhere to GDPR compliance build trust within their workforce which contributes to a more secure and transparent work environment.

Here's how GDPR supports employees:

• Ensures privacy and security.
• Grants data access and control.
• Simplifies data management.
• Promotes clear communication.
• Prioritizes consent-driven data processing.
• Informs employees about data use.
• Enforces accountability for responsible data handling.
• Builds trust and confidence at work.

What are the GDPR Requirements?

The General Data Protection Regulation (GDPR) lays out a strict framework that organisations must follow to safeguard the personal data of their employees. Here's a snapshot of the key GDPR requirements:

• Data subject rights: Under GDPR individuals (also known as data subjects) have the right to access, rectify and erase their data including the right to object to their data being processed and transferred. 

• Data processing principles: GDPR states that companies must comply with specific data processing principles, which includes lawfully, fairly and transparently processing data. Data should also only be collected for specific and lawful purposes and must be accurately stored and kept up-to-date.

• Record keeping and reporting: Under GDPR companies need to document all activities that involve the processing of data and in some instances should appoint a Data Protection Officer (DPO). They should also report any data breaches to the impacted data subjects and relevant bodies within the required time frames.  

Basically, any information that can be used to identify a person must be handled in accordance with GDPR, and any company in control of personal data is subject to these regulations. Simply put, any company in any industry operating outside the EU must comply, as this regulates the export of personal data intra and extra-eu. 

Violations of GDPR are Costly

While the standards of the GDPR are high, the fines and penalties for violations and non-compliance with GDPR are even higher. Fines for a single violation can run as much €20 million, or 4% of global annual revenue – whichever is higher.

This means that even the largest multinational corporations with significant revenue streams can find themselves on the hook for eye-watering fines if they fall short of GDPR requirements, so 

Legal costs can quickly mount when dealing with GDPR violations, because organizations often need the support of legal experts to navigate the intricate regulatory landscape, which can in many cases lead to extensive and costly legal disputes. The damage of GDPR violations also extend beyond penalties and fines and can significantly harm a company's reputation, undermining trust and potentially resulting in the customer churn which can have longer term financial implications. What's more, because of GDPR's global reach,  non-compliance can also hurt a company's operations outside the EU, potentially leading to further financial damage  and marginalisation. 

It comes as no surprise that businesses are taking a proactive approach to preparing for GDPR regulations, with many organisations across multiple sectors  now investing in robust data protection infrastructure, staff training, and reliable cybersecurity measures.

Why use an EOR for GDPR Compliance?

Employers of Record Services (EORs) play a vital role in helping clients achieve GDPR compliance and avoiding pricey violations. EORs implement strong data security measures to protect employee data, preventing unauthorized access and data breaches and can protect employers from the significant costs of hiring full-time regulatory experts to take on the responsibilities that GDPR compliance presents. With fixed monthly fees, an EOR service like Playroll can take the sting out of  navigating the complex GDPR Compliance maze that comes with Global expansion, saving time and money and giving businesses the bandwidth to focus on their core operations with confidence that their customer and employer data is secure at all times.

Here's how Playroll goes the extra mile to secure global compliance - safeguarding customer and employee data at all times:

• Using encryption mechanisms,
• Implementing access controls,
• Establishing secure storage systems,
• Implementing consent mechanisms, 
• Maintaining consent records,
• Conducting regular compliance audits,
• Preparing for data subject requests,
• Responding to data subject requests,
• Preparing data breach notifications.

Best Practices for Maintaining GDPR Compliance as an EOR

Employer of Record (EOR) services play a critical role in helping organizations to achieve GDPR compliance, by implementing strong data security measures, consent management, and conducting regular compliance audits. To ensure GDPR compliance while using Employer of Record services, clients make sure to follow these best practices:

• Select a GDPR-Compliant EOR: Choose an EOR with a demonstrated track record of GDPR compliance. Evaluate their data security measures, consent management processes, and legitimacy of their compliance audits.

• Establish data retention policies: According to GDPR data should only be stored for as long as required and only for the purpose for which it was collected. Data retention policies should also be implemented in collaboration with an EOR. 

• Clearly define data processing procedures: To ensure that data is collected and processed lawfully,  collaborate with your Employer of Record partner to outline the purpose and extent of data processing activities.

• Effectively manage cross-border data transfers: Companies that have an international presence, should pay careful attention to the transfer of data across borders and must ensure that protective measures are put in place, when employee data is transferred outside of the EU.

• Educate your workforce: Provide regular training for your employees on the significance of data protection and GDPR compliance, with special focus on their rights and responsibilities and the specific data processes procedures that exist. 

• Regularly evaluate compliance: Conduct regular compliance audits in collaboration with your Employer of Record service provider and stay up-to-date on any changes in the regulatory framework.

Playroll's Commitment to GDPR Compliance

At Playroll data security is seamlessly woven into every facet of our operations. Because we take security seriously, we’ve built a robust GDPR programme committed to protecting the data and privacy of our customers and their employees. 

• We regularly improve our security measures to protect your data and follow GDPR rules.

• We use strong security measures like secure system architecture, data encryption, regular system backups and security configuration adjustments. 

• We follow clear guidelines for how long we store data, with a dedicated Data Protection Officer to oversee this.

• Our staff regularly undergo training to understand data privacy regulations.

• We respond quickly to requests, work closely with third parties in line with GDPR guidelines and actively follow our privacy policy.

• We always have a legal reason for processing data and meticulously ensure that it complies with GDPR guidelines.