UK: Update to the Data Protection Act 1998 - Privacy Law

Last Updated: 20 March 2002
Article by Kate Brimsted

The English law of privacy may be in its infancy but general awareness of this developing legal concept, due mainly to high-profile cases, such as Douglas v. Hello!, the all-pervasive Human Rights Act 1998 and the Freedom of Information Act 2000 (not yet fully in force), is unquestionably on the increase. In conjunction with this it is important that both commercial and non-commercial organisations do not overlook their obligations in the area of data protection. The legal and non-legal consequences make it essential for data controllers to familiarise themselves with the broad-ranging and complex regulations controlling the use of information concerning identifiable, living individuals. This briefing therefore focuses on the Data Protection Act 1998, which forms a cornerstone of the increasingly important regime for protecting privacy.

The 1998 Act

The Data Protection Act 1998 ("1998 Act") came into force on 1 March 2000, however, a broad range of exemptions applied until the end of the first transitional period on 23 October 2001. The 1998 Act is currently passing through its second transitional regime, which applies until 2007. The 1998 Act implemented the EU Data Protection Directive (95/46/EC), the aim of which was to harmonise data protection law within the European Economic Area ("EEA") and ensure that personal data are transferred outside the EEA only to areas of "adequate protection".

The 1998 Act, the associated secondary legislation and the codes of practice comprise a complex and continuously evolving framework of rules and qualifications to those rules which this paper does not attempt to address in detail. The following describes the key provisions of most general application for the use of personal data in a commercial context.

The key provisions

The 1998 Act replaced the Data Protection Act 1984 while retaining essentially the same regulatory structure. Any person or organisation which processes personal data relating to identifiable, living individuals falls within the 1998 Act. Broadly, processing includes any activity involving data, from obtaining and using them through to destroying them. Notification (formerly called registration) is still required and processing personal data without having a notification remains a criminal offence (subject to certain exemptions). The essential obligation under the 1998 Act is to process data in accordance with the eight Data Protection Principles. These include a requirement that processing be "fair and lawful". For processing to be deemed "fair" at least one of the following criteria must be satisfied:

  • The data subject has given his or her consent to the processing.
  • The processing is necessary in order for a contract with the data subject to be performed. In a pre-contractual situation, processing is permitted only at the request of the data subject for the purposes of entering into a contract.
  • The processing is necessary for the data controller to comply with its (non-contractual) legal obligations.
  • The processing is necessary for the performance or exercise of public functions, such as the administration of justice.
  • The processing is necessary for the purposes of legitimate interests pursued by the data controller (or by a third party or parties to whom the data are disclosed) except where the processing is unwarranted by reason of prejudice to the data subject’s rights and freedoms or legitimate interests. At first sight this provision appears to allow a wide scope of processing and, although its interpretation remains somewhat unclear, any processing which is a necessary part of the data controller’s business has the potential to fall within the ambit of this provision. However, although it may be arguable whether particular processing is "necessary", depending on the surrounding circumstances, it is likely that the "necessary" requirement is a higher test than "convenient" or "preferable". Further, the data controller should ensure that any "legitimate interest" it is pursuing is included in its notification as a purpose and is also notified to the data subject.

Additional requirements apply to the class of "sensitive personal data" (below). Note that in assessing whether processing is fair, the method by which the data are obtained is taken into account. Except in circumstances where it would involve a "disproportionate effort", fair obtaining necessitates that the data controller notifies the data subject of its identity, the purpose(s) for which the data are intended to be processed and any other information to enable the processing to be fair. Data controllers obtaining personal data from agencies or other third party sources should check that this requirement has been satisfied by such data providers.

Terminology

The 1998 Act includes the following terminology:

  • Those who determine the purposes for which data are processed are "data controllers".
  • Third parties who process data for "data controllers" are "data processors".
  • Individuals whose data are recorded are "data subjects".
  • Registration becomes "notification".
  • The Data Protection Registrar became known as the Data Protection Commissioner. However, as a result of the enactment of the Freedom of Information Act 2000, the Data Protection Commissioner’s title has once again changed to the Information Commissioner.

Manual data

The 1998 Act introduced controls over the processing of personal data in non-electronic form ("manual data") for the first time. If manual data are recorded with the intention that they should be processed automatically or if such data are structured by reference to individuals in such a way that specific information relating to individuals is readily accessible, the data will be deemed to be automated personal data and will be subject to the provisions of the 1998 Act. In practical terms, most manual filing systems including information about living individuals are caught, subject to the now very limited transitional provisions (below).

Sensitive data

The category of "sensitive personal data" introduced under the 1998 Act includes data as to racial or ethnic origin, political opinion, religious beliefs, trade union membership, physical/mental health, sexual life and criminal proceedings/offences. It is lawful to process "sensitive personal data" only in specified circumstances, including where:

  • Explicit consent is given by the data subject to the processing.
  • The processing is necessary for the data controller to satisfy obligations or rights imposed or conferred by law in connection with employment.
  • The processing is necessary to protect the vital interests of the data subject or another person.
  • A not for profit body or association wishes to process sensitive personal data relating to its members, subject to safeguards and confidentiality measures and such processing being restricted to legitimate activities without disclosure to third parties.
  • The information contained in the personal data has been made public as a result of steps deliberately taken by the data subject.
  • The processing is necessary for the purposes of legal proceedings, obtaining legal advice or otherwise necessary for establishing, exercising or defending rights.

Data subject rights

Under the 1998 Act data controllers have a positive obligation to act in response to the following data subject rights. This must be done within stipulated time periods.

  • A data subject may be entitled to access his personal data being processed by a controller (subject to a number of exceptions). The data subject should apply in writing and pay any applicable fee (the maximum is generally £10) and the controller then has 40 days to provide access. The data subject may also be entitled to a copy "in permanent form" of his data held by the controller.
  • A data controller can be prevented from processing personal data if it is likely to cause unwarranted damage or distress. On receipt of a written notice from the data subject, the data controller should respond either stating that it has ceased processing or provide reasons indicating that the data subject's notice is unjustified.
  • The 1998 Act also gives a data subject the right to prevent the processing of personal data for direct marketing purposes. On receipt of a written notice from the data subject, the data controller should respond specifying the steps it has taken or intends to take to terminate such processing. Direct marketing means "the communication (by whatever means) of any advertising or marketing material which is directed to particular individuals".
  • A data subject will also have the right to require a data controller to ensure that no decision which significantly affects him or her is based solely on processing which is automated. This covers, for example, the evaluation of a data subject for his or her performance at work, creditworthiness, reliability or conduct.

Trans-border data flow

The 1998 Act introduced a new principle preventing the transfer of personal data to countries outside the EEA which lack an "adequate level of protection for the rights and freedoms of data subjects". The assessment of the adequacy of protection (or otherwise) offered by the destination country lies in the hands of the data controller. Whilst under the previous legislation the (then) Registrar could serve specific transfer prohibition notices, this 1998 Act provision effectively reverses the position. Even now, almost two years after the 1998 Act came into force, the ramifications continue to cause anxiety to businesses, since many third countries, including the United States, do not satisfy the adequacy requirement.

It was in an attempt to avert what threatened to become a US-European trade conflict that the "Safe Harbor" scheme was devised. This voluntary system of self-certification enables its US-based signatories, including the likes of Microsoft, to demonstrate adequate protection and thus qualify to receive personal data transfers from the EEA. The scheme has the endorsement of the European Commission.

In addition, the European Commission has formally recognised three non-EEA countries as having adequate data protection laws: Canada, Switzerland and Hungary. Transfers to these countries may be made on the same terms as if data were being transferred within the EEA.

Exemptions from the ban on trans-border data flow

There are a number of exemptions which aim to allow businesses to transfer personal data for legitimate purposes. They include circumstances where:

  • The data subject has consented to the transfer.
  • The transfer is necessary for a contract between the data controller and the data subject to be performed.
  • The transfer is necessary for legal proceedings, reasons of substantial public interest or to protect the vital interests of the data subject.
  • The transfer has been given individual clearance from the Information Commissioner.
  • The transfer is made on terms of a kind approved by the Information Commissioner as ensuring adequate safeguards for data subjects’ rights.

It is this last exception which has been the focus of most attention in recent months. In June 2001 a set of model contract clauses for controller to controller transfers was approved by the European Commission. The Commission’s Decision is binding on all Member States’ data protection authorities. The clauses have however been strongly criticised by organisations, such as the ICC and the CBI as being fundamentally unattractive to businesses, particularly because they impose joint and several liability on the parties. A number of business associations have together made a joint submission to the Commission comprising a set of alternative clauses for consideration. At the time of writing the Commission’s response is still awaited.

A set of clauses governing transfers from EEA-based data controllers to data processors based in a third country was approved in January 2002 (with effect from 3 April 2002).

Press freedom

The 1998 Act contains provisions intended to ensure that legitimate uses of personal data for journalistic, literary and artistic purposes are not restricted by the requirements under the 1998 Act, particularly given the inclusion of manual data. Such activities (if they require the processing of personal data) are in essence subject to the 1998 Act, but have the benefit of a complex set of exceptions, which broadly concern the assessment of public interest in freedom of expression.

Notification

Under the 1998 Act, data controllers are required to notify the Information Commissioner of certain "particulars", such as: name and address; description of the purpose(s) or intended purpose(s) to which personal data will be applied; if there is any intended disclosure of personal data, a description of the class of intended recipient(s); the name and address of the data processor (if one is used); and any transfers or intended transfers of personal data outside the EEA. In addition, a general description of the measures the data controller intends to implement for the purpose of complying with the 7th data protection principle (i.e. security arrangements) must be provided.

This information is placed on a register which may be viewed by the public. There is a requisite fee to pay (currently £35) and notifications are renewable annually. Note that any changes to the above particulars occurring within the year starting from the notification date must be promptly notified to the Information Commissioner. It is also important to note that notification must be completed before any processing begins.

The Office of the Information Commissioner at Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF provides an information helpline: 01625 545 745 and a web site: http://www.dataprotection.gov.uk, both of which offer information and advice about notification.

Transitional provisions

Personal data which were subject to "processing already under way" immediately prior to 24 October 1998, enjoyed certain transitional relief where some of the 1998 Act obligations were waived or exempted in part. The transitional arrangements were in two phases, the first of which ended on 23 October 2001.

  • The second transitional phase began on 24 October 2001 and will end on 23 October 2007. As with most transitional provisions, the details are complex and cover a range of possibilities. However, the extremely limited second phase exemptions are unlikely to be of any significant benefit to the majority of businesses and organisations and are, therefore, not discussed further here.

Sanctions

The 1998 Act carries with it the potential of both civil and criminal liability. In terms of civil sanctions, these include a mechanism for individuals to claim compensation where they can prove that they have suffered damage, distress or loss arising out of processing in breach of the 1998 Act. Further, in certain circumstances the court may order a data controller to rectify, block, erase or destroy inaccurate personal data. Quite apart from purely legal liabilities, data controllers need to be alive to the potential for damage to their business reputation which a breach of the 1998 Act can lead to.

Criminal proceedings can be brought either by the Information Commissioner or by, or with the consent of, the Director of Public Prosecutions. Offences under the 1998 Act may be tried in the Magistrates Court or the Crown Court and are punishable by a fine. On summary conviction the maximum fine is currently £5,000. However, in the Crown Court there is no upper limit to the fine. The court also has the power to order forfeiture, destruction or erasure of material containing personal data e.g. deletion of entire databases. Where an offence has been committed with the "consent or connivance of or is attributable to neglect" on the part of a director, manager, secretary or any person purporting to act in any such capacity, then they may be liable in respect of the same offence as the company.

Criminal offences include:

  • Processing data without a notification.
  • Failing to notify the Information Commissioner of any changes to notification particulars.
  • Failing to comply with a Notice issued by the Information Commissioner.
  • Making false statements, knowingly or recklessly, in response to a Notice issued by the Information Commissioner.

Practical implications

The 1998 Act carries with it various time, administration and investment costs for the data controller, including the following:

  • Data subjects generally have to be notified at the time their personal data are obtained.
  • Data controllers must respond when notified of data subject rights within strict time limits.
  • Data controllers may have to invest in better technology, not only to ensure that their database systems are able to flag, suppress, etc. data in order to process data fairly, but also to meet their obligations to keep data secure.
  • Notifications have to be renewed annually.
  • Notification must be complete before any processing of data subjects’ data begins.
  • Processing of manual data must also meet the requirements of the 1998 Act.
  • Data controllers transferring personal data outside the EEA need to satisfy the eighth principle or the transfer will be in breach of the 1998 Act.
  • Organisations may find the increased obligations require the appointment of a dedicated data privacy compliance officer to establish, maintain and monitor data privacy principles to achieve best practice.

Checklist-Data Protection Act 1998

Consider the 1998 Act in relation to any of the following:

Notification obligations

Information obligations to data subjects

Manual data

Sensitive personal data

Direct marketing

Transfers of data outside the EEA

Processing which may cause damage or distress

Automated decision making

Use of personal data for press purposes

 

© Herbert Smith 2002

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

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