Organizations collect, store, and process more data about employees than they have ever done before. Nowadays, virtually every business uses some form of digital technology in the HR function. This means that organizations handle a large amount of confidential personal employee information every day. The speed and efficiency with which HR can operate have dramatically increased with the reach of digital systems; at the same time, however, the risk associated with data privacy and security has also increased.
There are a number of strict laws in place throughout the world concerning privacy and data protection. Businesses that do not protect personal employment-related information will incur very strict consequences and penalties, loss of trust from employees, and damage to their reputation. One of the most important laws in the world regarding data protection is known as the General Data Protection Regulation (GDPR).
Regardless of whether your company does business in Europe or simply processes the information of EU citizens, it is important to be aware of both GDPR and employee data protection. The purpose of this document is to provide all the information necessary for your organization to understand what the GDPR is, what the main elements of the GDPR are, how the GDPR affects HR departments and their compliance obligations relating to the GDPR, as well as how organizations should protect and manage employee personal data.
What is GDPR?
GDPR (General Data Protection Regulation) is an extensive set of regulations enacted by the EU in 2018 aimed at improving the data privacy for individuals living in the EU while establishing a unified privacy standard for all EU nations. All organizations that process PII (personal identifiable information) from EU residents must comply with GDPR, regardless of where their organization is located.
Therefore, businesses located outside of the EU, including Indian organizations and many global organizations, must comply with the GDPR regulations if they are collecting, storing, or processing personal identifiable information from EU-based employees, candidates, or customers. It includes many rules around how the data is collected, how it can be used, how long it is stored, how it can be shared, and how it can be deleted; there are also significant requirements for organizations to ensure that they handle the data with transparency, accountability, and security.
Why GDPR Matters for Employee Data Protection?
Employee data represents a very important and valuable asset to an organization. The HR department manages recruiting, payroll, health, and performance records as part of its everyday activities. The General Data Protection Regulation (GDPR) is meant to ensure the responsible collection, processing, and storage of this data.
The GDPR prevents the misuse of data, promotes transparency, and holds organizations accountable for the protection of data. Organizations must comply with the GDPR to build trust with their customers, enhance security, and protect their reputation when conducting business globally or by providing goods and services to customers located in the EU.
Here’s why GDPR plays an important role in strengthening employee data protection within organizations:
1. Legal Compliance and Risk Mitigation
By meeting data protection standards, organizations can avoid legal penalties, lawsuits, and regulatory penalties.
2. Greater Employee Confidence
By displaying transparency and accountability regarding the handling of sensitive personal data, organizations create a sense of trust among employees.
3. Increased Data Security
Organizations implement encryption, access controls, and other information security technologies to help prevent unauthorized breaches of sensitive employee information.
4. Defined Data Processing Rules
Organizations provide defined guidelines for collecting, maintaining, distributing, and destroying employee data in compliance with applicable laws and ethical standards.
5. Improved Organizational Reputation
By being seen as being ethical and compliant, organizations strengthen their reputations among employees, applicants, and the global community.
6. Improved HR Governance
By documenting policies and procedures, conducting audits, and having clearly defined accountabilities, organizations can improve the efficiency of managing employee data across all operational areas.
What are the Key Principles of GDPR?
1. Lawfulness, fairness, and Transparency
Organisations must process the personal data of employees lawfully, and provide employees with clear information regarding how their personal data is going to be processed, what the purposes of the processing of their personal data are, as well as what rights they have with respect to their personal data, to provide them with full transparency and fairness.
2. Purpose Limitation
An employer shall only collect personal information that is required for legitimate business purposes and shall not re-use that personal information for any other purpose that is not related to the original business purpose for which it was collected.
3. Data Minimisation
HR should collect from its employees only that information that is necessary for employment-related purposes, prohibiting the collection of unnecessary or irrelevant personal information from employees.
4. Accuracy
An organisation must keep its employee records up-to-date and ensure that any personal data that is being held remains accurate.
5. Storage Limitation
Employers should retain personal data for predetermined periods of time and should have an established retention policy and deletion procedures.
6. Integrity and Confidentiality
Employers must implement adequate security measures to protect employee data from unauthorised access, breaches, or leaks through strong security controls, encryption, and restricting access.
7. Accountability
An employer should establish policies and procedures regarding their compliance with privacy obligations, as well as conduct audits and maintain appropriate documentation as evidence of their compliance with privacy obligations and principles of data processing of employee personal data.
What is Considered Employee Personal Data Under GDPR?
According to the General Data Protection Regulation (GDPR), an employee’s personal data refers to any information about a person that can be used on its own or with other data to uniquely identify that person. This includes easy identifiers such as their name and contact details, to more technical and wider-based identifiers attributable to an employee (e.g., but not limited to logs, badges).
Also, in addition to the “normal” personal data referred to above, under GDPR, there are “sensitive” or “special-category” personal data, which is classed as more sensitive and therefore requires additional protection. For example, an individual’s health records or biometric data. Therefore, it is important for HR professionals to understand which types of Personal Data are considered in order that they can appropriately handle access to that data in a manner that complies with the GDPR requirements.
Under GDPR, personal data refers to any information that can identify an individual directly or indirectly. In the context of employees, this includes:
Full name, address, phone number, email ID
- Aadhaar and passport details
- Bank account and salary information
- Tax and compliance data
- Attendance and leave records
- Performance reviews
- Medical records and health insurance details
- Biometric data
- CCTV footage
- IP addresses and login details
What are the Employee Rights Under GDPR?
1. Right to Access
Employees may make requests to be provided with the information regarding whether their personal data has been processed and, if so, to obtain copies of their personal data held by the Organisation.
2. Right to Rectification
Employees are entitled to make requests to correct, update, or delete personal data without undue delay.
3. Right to Erasure
Employees may make requests for the erasure of their personal data when the data is no longer necessary or has been processed unlawfully.
4. Right to Restrict Processing
Employees are entitled to make requests to restrict how a company processes their personal data, while any disputes about the accuracy or legality of their information are resolved.
5. Right to Portability
Employees may request that they receive copies of their personal data in a structured format so that they can transfer their data to a new employer.
6. Right to Object
Employees have the right to object to certain processing of their personal data by a company (including that based on legitimate interests or direct marketing).
7. Right to Withdraw Consent
Employees may withdraw any prior consent to data processing activities at any time and will not be penalised when doing so.
How GDPR Impacts Key HR Functions?
1. GDPR and Recruitment Process
Recruitment includes receiving many resumes, collecting personal information, and conducting background checks for potential candidates. Organizations must have legally compliant ways of managing personal information about candidates from the onset of the hiring process in accordance with the General Data Protection Regulation (GDPR).
In order for an organization to comply with the regulations, it must:
- Obtain clear and obvious consent from each candidate prior to storing their resume.
- Inform candidates of the time frame during which the organization plans to keep their data.
- Delete candidate data at the end of the data processing length
- Have a secure method of storing candidate resumes within their Applicant Tracking System (ATS).
If any of your organization’s candidates come from a country in the EU, then your company must comply with GDPR and its regulations at all times when hiring employees.
2. GDPR and Payroll Management
Payroll systems contain very sensitive information regarding employee finances and taxes. Under GDPR regulations, organizations must take strong measures to protect payroll data from unauthorized access, leakage of payroll information, or misuse.
Organizations must perform the following:
- Implement secure payroll software and database systems.
- Ensure that only authorized HR or finance staff have access to payroll data.
- Encrypt sensitive pay and tax data.
- Maintain audit logs of the access to every modification made to payroll data.
Payroll data is managed incorrectly; serious compliance violations and monetary fines will follow.
3. GDPR and Employee Monitoring
A variety of businesses utilize monitoring equipment, including CCTV cameras, biometric attendance systems, and software for productivity tracking. As this equipment collects personal information from employees, monitoring must comply with GDPR regulations regarding privacy and guidelines for monitoring.
According to The GDPR:
- All employees must be informed of the monitoring and how it will affect them.
- Employees must receive information about the purpose of the monitoring and how much it will involve.
- Monitoring must be necessary and proportionate for the purposes intended.
- All collected personal data must be stored securely.
If monitoring is excessive, hidden, or unjustifiable, it may breach GDPR principles and infringe on the rights of employees.
What is the Role of HR in GDPR Compliance?
The HR department is responsible for making sure the organization complies with the General Data Protection Regulations (GDPR). The responsibilities of the HR department go beyond documentation to include having structured processes, monitoring processes, and educating employees about ongoing data protection.
1. Develop new employee privacy policies
Employers should develop new employee privacy policies, which should be written to define how customer data will be collected, processed, stored, shared, and safeguarded.
2. Keep a record of data processing
HR departments should maintain records of all employee data processing. This task demonstrates accountability and compliance with regulations.
3. Conduct data audits
Conducting regular internal data audits can help HR identify areas of data-related risk, eliminate redundant data, and ensure compliance on an ongoing basis.
4. Implement and maintain secure data storage systems
HR departments should work with the IT departments to establish secure systems for storing employee data to help guard against data breaches.
5. Train employees regarding data protection
HR departments should hold regular employee training sessions to educate employees about their responsibilities under data privacy law and data security best practices.
What are the Practical Steps to Ensure GDPR Compliance?
Here are actionable steps organizations can follow:
1. Perform a Data Audit
Determine what employee data is being collected, where it is stored, how it is processed, and the associated risks.
2. Change Privacy Policies
Explicitly define how employee data will be collected, used, shared, how long it will be kept, and what rights employees have in clear and transparent privacy policies.
3. Create Access Controls
Restrict access to employee data based upon job function so that only those employees approved to access sensitive employee information will have access.
4. Utilize Encryption and Secure Servers
Encrypt all sensitive employee information and securely store it on a secure server to prevent unauthorized users from obtaining or accessing the information.
5. Create Data Retention Policy
Set out retention timelines for employee data and regularly remove out-of-date, irrelevant, or unnecessary employee data securely.
6. Provide Training to Employees
Educate employees periodically about their responsibilities to protect data, cyber threats, and methods for securing employee data.
7. Appoint a Data Protection Officer (if required)
Appoint a qualified data protection officer to ensure compliance, educate Management, and oversee data protection programs in your organisation.
How HRMS Helps in GDPR Compliance?
A modern HRMS supports organizations in meeting General Data Protection Regulation (GDPR) requirements by improving security, transparency, and accountability across employee data management processes.
1. Centralize Employee Data Securely
HRMS centralizes all employee information into a single secure platform. This minimizes the risks associated with multiple repositories for data storage. This also creates a more structured way to manage employee data.
2. Limit Access To Data
Role-based access controls ensure that only authorized personnel have access to sensitive employee information to view, edit, and process that information.
3. Monitor Employee Data Processing Activities
HRMS tracks the collection, use, and sharing of employee information to promote transparency and ensure compliance with regulations.
4. Maintain Audit Log History
Automated audit logs provide a digital history of the activity related to accessing and modifying employee data. This allows the organization to demonstrate that it has acted with integrity and in compliance with regulations when being audited.
5. Establish Data Retention and Deletion Procedures
The HRMS will automatically apply data retention policies and delete outdated employee data in compliance with the applicable retention timelines.
6. Create a Secure Document Management System
HRMS creates a secure repository to store contracts, identification documents, and employee records, encrypted and with restricted access controls.
7. Create Encrypted Cloud-Based Repositories
Encrypted cloud storage protects employee data and allows access to employee data remotely while ensuring system reliability and securing employee information from unauthorized access.
Conclusion
GDPR mandates that organizations treat their staff personnel records with honesty, responsibility, and secure access. Savvy HRMS eases the demands of compliance through the secure profession of cloud-based storage, role-specific permissions, encrypted payroll, automated retention policies, and current monitoring capabilities so businesses may protect personnel records while remaining fully compliant.
Book a free demo today and discover how Savvy HRMS can secure your employee data while transforming your HR processes.
