Table of Contents
In Short
- UK GDPR applies to SaaS suppliers when processing personal data.
- SaaS suppliers must have Data Processing Agreements and robust security measures.
- Non-compliance can result in severe fines and damage to customer trust.
Tips for Businesses
Ensure your business complies with UK GDPR by having a clear Data Processing Agreement with customers, implementing strong security measures, and understanding your role as either a data controller or processor. Regularly review agreements with sub-processors and seek legal advice if you are uncertain about your obligations.
As a Software as a Service (SaaS) supplier, your business may process personal data on its customers’ behalf when you deliver your services. Several key privacy law considerations and obligations apply where you act as a data processor. This article explores some of the essential UK GDPR obligations for SaaS providers acting as data processors and why compliance with mandatory data protection rules is vital for your business.
When Does Data Protection Law Apply to SaaS Businesses?
UK GDPR applies whenever your business processes personal data. Personal data includes any information directly or indirectly identifying a person, such as names, email addresses, IP addresses, or cookie identifiers. If your SaaS services involve processing this information, you must comply with UK data protection laws.
For example, suppose your SaaS platform enables users to upload personal data, and you only access that data to deliver your services but do not control it. In that case, your business is likely acting as a data processor.
Suppose your SaaS platform allows businesses to manage their own employee payroll or HR systems, which you have access to. In this case, you can process employee data on behalf of your customers when delivering services. In such cases, various data processor obligations will apply.
What Is the Difference Between a Data Controller and a Data Processor?
Understanding the distinction between a data controller and a data processor under the UK GDPR is essential. A data controller determines the purposes and means of processing personal data. In contrast, a data processor processes personal data on behalf of the controller, following their instructions. Many SaaS providers’ roles may involve being data processors who process personal data on behalf of their customers. However, a SaaS provider may also act as a data controller in certain circumstances and in its own right (for instance, when using customer information for its own purposes). Being a data controller will give rise to a range of additional considerations.
As such, it is crucial to recognise that SaaS providers are not always data processors. If your SaaS business collects or processes personal data for its own purposes, such as for marketing, or analysing customer behaviour, you may be acting as a data controller for those activities. In these cases, you are determining the purpose and means of the processing, meaning that different obligations under the UK GDPR will apply to your business. Additionally, if your SaaS business processes only fully anonymised data (data that cannot identify any individual and cannot be re-identified), then the UK GDPR rules may not apply.
If you are unsure about your specific responsibilities or whether you are acting as a data processor or data controller in your SaaS business, it is advisable to seek legal advice to ensure you understand what actions you need to take for compliance with the UK GDPR.
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What are Some Key Obligations of a SaaS supplier as a Data Processor?
As a data processor, your business has several legal obligations under UK GDPR when handling personal data on behalf of a data controller. Below are some key obligations:
Data Processing Agreements
Whenever your business acts as a data processor, you must have a Data Processing Agreement (DPA) in place with the data controller (your customer). This contract ensures that both parties meet their obligations under the UK GDPR. The DPA must specify the types of personal data processed, the purpose of the processing, and the security measures you will use to protect that data.
Additionally, the DPA must include how long the data will be retained and when it will be deleted. It must also specify how your business will assist the data controller in fulfilling its obligations under the UK GDPR, such as responding to data subject access requests or managing data breaches.
You may enter into a standalone DPA with your customers or include data processing clauses to cover the same provisions within your general services agreement.
Security Measures for SaaS Providers
As a data processor, you must implement appropriate technical and organisational measures to protect personal data. The security measures should be appropriate to the risk involved in the data processing activities. This may include encrypting data at rest and in transit and ensuring access is restricted to authorised personnel only.
Under the UK GDPR, a risk-based approach to data security is essential. This means assessing the risks associated with the processing activities and implementing the appropriate safeguards to mitigate those risks. Regularly testing and auditing your systems to identify vulnerabilities is crucial, as is providing employee training to ensure that staff understand their responsibilities when handling personal data.
This cheat sheet will explain your SaaS contract essentials.
Managing Data Breaches
The UK GDPR requires you to notify the data controller without undue delay in the event of a data breach involving your customers’ personal data. The data controller must assess whether the breach must be reported to the Information Commissioner’s Office (ICO). If the breach is likely to risk individuals’ rights and freedoms and meets reporting requirements, the controller must notify the ICO within 72 hours.
As a data processor, you must have procedures to detect and report breaches swiftly. These procedures should include steps for containing the breach, assessing its impact, and notifying the data controller immediately. By responding promptly, you help the controller manage the breach and minimise potential damage. It is important to note that the responsibility for notifying the ICO rests with the data controller. Still, the processor must assist in providing the necessary details of the breach where necessary.
Using Sub-processors
If your business uses sub-processors to help deliver services, such as third-party cloud storage providers, you must seek the data controller’s authorisation before engaging them. Under the UK GDPR, you must ensure that any sub-processors comply with the same GDPR obligations and standards as your business.
The Data Processing Agreement with the controller should outline how sub-processors will be engaged and specify that they are subject to the same security measures and UK GDPR obligations. It is essential to regularly review your sub-processors to ensure they remain compliant with UK GDPR requirements. Failure to ensure that your sub-processors meet these standards could expose your business and customer to potential legal liability and regulatory fines.
These are a handful of critical obligations, but your business may also be subject to various other obligations.
Why SaaS Providers Must Take GDPR Compliance Seriously
Compliance with the UK GDPR is critical for SaaS providers, not only to avoid regulatory fines but also to maintain customer trust. Non-compliance can result in significant penalties, with fines of up to £17.5 million or 4% of annual global turnover, whichever is higher. Beyond financial penalties, a data breach or GDPR violation can damage your business’s reputation, losing customers and business opportunities. Customers are increasingly concerned about protecting personal data given the implications of non-compliance with UK GDPR. Accordingly, failing to prioritise compliance could negatively impact your bottom line.
Key Takeaways
Complying with the UK GDPR is vital for SaaS providers and should be a top priority. Not only is it essential for maintaining customer trust, but also avoiding penalties and enforcement action. As a data processor, it is vital to ensure that you have clear Data Processing Agreements in place, setting out the scope of data processing, security measures, and responsibilities between you and your customers. You should also implement robust security measures, regularly test your systems, and provide support when necessary, including responding to data subject access requests and managing data breaches.
If you need assistance understanding which UK GDPR obligations apply to your SaaS business, LegalVision’s experienced data privacy lawyers can assist you as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft or review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
You act as a data processor when you process personal data on behalf of your customers, following their instructions, and do not determine how or why the data is processed. However, you may also act as a controller in a SaaS business. You should take legal advice if you are unsure about your roles and obligations under UK GDPR.
What should your Data Processing Agreement include?
Your DPA should include a range of vital mandatory clauses, including:
- Terms defining the scope of data processing.
- The types of personal data you are processing on your customer’s behalf under your SAAS agreement.
- The security measures are in place.
- Provisions around data retention.
It must also cover how you will assist the data controller with their UK GDPR obligations, such as responding to data subject requests and handling breaches. The agreement should specify provisions for working with sub-processors and ensuring their compliance with the UK GDPR.
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