Data Processing Agreements

As a business if you’re dealing with another party (including another business) and personal data's involved, you may need a data processing agreement or data sharing agreement. Implementing these agreements is important for UK GDPR compliance and to help protect your business.

What's the difference?

A data processing agreement (DPA) is a written contract put in place between a controller and a processor. Typically, a business will engage a supplier which then acts as a processor of personal data. The agreement can be standalone but is often implemented as an addendum to the relevant main commercial agreement, for example a services agreement or a set of standard terms.  

Crucially, when a controller engages a processor, it must be via a written contract which contains certain items prescribed by the UK GDPR.  

A data sharing agreement (DSA) will typically be put in place between two controllers, either acting jointly or independently.  A written agreement isn’t required under the UK GDPR but it is always advisable to put one in place to ensure responsibilities are clear and to help mitigate against legal risk.  

What does a DSA contain?

These agreements will consider items required under the UK GDPR, including the subject matter, duration, nature and purpose of the processing, categories of personal data and types of data subject. It will also factor clear and express obligations on the processor in line with the UK GDPR and implement provisions governing recording keeping, audit rights, security, personal data breaches, data subject requests, direct marketing,  subcontractors and data return and destruction It would also (ideally) provide an uncapped indemnity from the processor – processors are only liable for loss or damage suffered to data subjects/controllers in limited circumstances therefore a controller should seek a capped indemnity and satisfy themselves that the processor has sufficient insurance/assets to pay out should the controller ever seek to enforce the indemnity against the processor.  

What does a DPA contain?

These agreement should express a purpose for why relevant personal data is shared and set out clear obligations on each controller as data sharer and data receiver. A DPA should also provide provisions governing quality, access, storage, retention, security, onward transfer and deletion of shared personal data and direct marketing (if relevant);  and identify limitations and exclusions of liability and optionally an (uncapped) indemnity. Unlike the position with processors, under UK GDPR controllers are liable for the respective loss and damage they cause, so these provisions will typically be mutually negotiated as each controller is usually concerned to limit its liability under the contract.  

What should I think about as a controller engaging a processor?

As a controller dealing with a processor, a crucial concern will be data security – essentially you will want the processor to apply the same security standards to the processed personal data as the controller does.  You will also want control around onwards transfers of personal data or engagement of sub-processors by the processor.  In addition, a controller will want to see that a processor has a good, demonstrated track record in respect of data protection compliance and ideally a dedicated data protection compliance team or individual within the business.  

What should I think about as a processor being engaged by a controller?

The controller will likely be concerned about its potential liability position as set out above and many controllers will have ‘standard’ non-negotiable data processing agreements. Therefore, as a processor you’ll want to ensure you can comply with all obligations imposed on you under any processing agreement, for example that as a business you’re able to notify the controller of a personal data breach within 24 hours of becoming aware of it if that is what’s required under a processing agreement with a controller.  If you’re relying on data protection insurance, you’ll want ensure your insurance cover reconciles with your liability under the processing agreement to mitigate against a shortfall, or even worse, the insurer not paying out what you expected that it would!  

How can we help?

We can advise on the data sharing or processing relationships from a legal perspective, including identifying independent and joint controllers and data processors. We also have extensive experience in drafting, reviewing and negotiating both national and cross-border data processing and data sharing agreements on behalf of clients across a range of sectors.  

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