The National People's Congress Standing Committee has now
finalised the new Cyber Security Law
("CSL"), to take effect on 1 June 2017.
The fast development of the internet in China has caused a rapid
escalation of security issues in China, such as the security of the
data of internet users, the management of websites and e-commerce,
and all types of cybercrimes. The CSL is intended to address
significant gaps in protections around personal data and security
in China. The CSL for the first time introduces comprehensive data
privacy protection in China and imposes obligations on companies
who handle personal information via electronic means.
The CSL applies to all personal information that is processed
electronically, but in this alert we focus on the implications for
Employee data in China: what is the current state of play?
Employers' current obligations with respect to employee data
in China are far from clear. Employers are required to "keep
employees' personal information confidential and not to
publicize personal information without the consent of the
employee" (under the Regulations on Employment
Services and Employment Management, issued by the
Ministry of Labour and Social Security of the PRC in 2007).
Similarly, the PRC Criminal Law and
Tort Liability Law provide that
mishandling of personal information and individual privacy can
attract criminal and financial sanctions. However, the
concept of "personal information" is not defined under
Chinese law, making it difficult for employers to be confident that
they are compliant.
The CSL: a clearer picture
With the introduction of the CSL, employers will now have
clarity as to what constitutes personal information and more
clarity as to what steps need to be taken to safeguard data.
The CSL defines personal information broadly, as all types of
information recorded by electronic or other means that can identify
an individual either in itself or in combination with other
information, including but not limited to a citizen's name,
date of birth, ID card number, personal biometric information,
address and telephone number. The CSL applies to information
collected, stored or transmitted electronically.
The CSL places obligations on "cyber service
providers", which are defined as the owners and operators of
websites and servers, and internet service providers. This would
capture employers in their handling of electronic employee data,
including personnel files saved onto internal or external servers
and information shared by email. Responsibility may in some
cases be shared between the employer and a third party service
provider who provides the employer's servers or hosts its
website. Importantly, the CSL provides express obligations on
a cyber service provider to obtain individual consent for the
handling of personal information, and to maintain the security of
and prevent unauthorised disclosures of personal
Where there is a breach, the cyber service provider may be
fined, may be required to close a website which breaches the CSL,
or may even have its license revoked.
What does this mean for employers?
Unsurprisingly, given this is a new area for the Chinese
legislators, the picture is not yet clear, in particular how a
breach would be enforced. Would the principle of shutting
down an external website that breaches the CSL translate to
restricting an employer from handling employee data electronically,
in the event of a breach? As is typically the case in China, the
new law lays down general principles which will then require
interpretation by the Courts, and potentially separate government
What is apparent however is that there is a new focus on data
privacy in China, and employers will need to review their
employment documentation and employee notifications, as well as
putting in place adequate security procedures to ensure compliance
In term of next steps, employers should be ready to take the
following actions by June 2017 when the CSL comes into force:
Most importantly, the employer needs to have obtained
individual employee consent for the handling of personal
Before collecting and using personal information, the employer
needs to issue an employee notice giving details of what personal
information will be collected, and how it will be stored and
More fundamentally, employers should review the security of
their IT systems to guard against unauthorised disclosures of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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