A DPA, also known as a GDPR data processing agreement (DPA), is a legally binding contract between a company (the data controller ) and a third-party data processor. This DPA contract sets out the obligations and responsibilities of both parties in relation to the processing of personal data. It also ensures that the data processor handles all data per the GDPR guidelines.
For any organization–big or small, data is one of the most vital and invaluable assets. In order to safeguard it and prevent any form of a data breach, it is crucial for all businesses that handle personal data to have a DPA. This is an important part of compliance when hiring globally.
The primary purpose of a DPA is to determine how the data processor will handle the data provided by the company which includes certain provisions and safeguards to ensure that personal data is processed in a lawful, fair and transparent manner. The DPA must cover the scope of the data, the purpose and duration of the processing, the type of personal data that will be processed, the security measures that will be implemented, the rights of data subjects, and the procedures for handling data breaches.
The GDPR DPA is an important contract that ensures DPA compliance with data protection laws and regulations. It is helpful in establishing clear and transparent relationships between companies and data processors.
Why do you need a DPA?
A DPA secures a company’s personal data and ensures that suitable security measures are taken while processing personal data and making sure that it is GDPR-compliant.
For instance, let’s say a company wants to outsource a third-party data processor to conduct certain data processing activities such as personal data. In such cases, it is crucial that the company signs a DPA with the data processor in compliance with GDPR outlining the protection of personal data. The DPA also ensures that the data processor guarantees data confidentiality and security so that your company can be protected from any form of data breach.
A DPA aids in building trust and transparency between the data controller and data processor, as they establish a formal DPA agreement that outlines the terms and conditions for processing personal data.
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Who signs a DPA?
A Data Processing Agreement is signed by the data controller, the data processor and the sub-processors
What happens if you don’t sign a DPA?
Not signing a Data Processing Agreement (DPA) can have serious consequences for both the data controller (the company) and the data processor. For instance, if you haven’t signed a DPA and the third party mismanages the personal data provided by you, you will be liable for not complying with data protection and GDPR requirements and face severe penalties as a result of a data breach.
For companies and people under the jurisdiction of the EU, there is absolutely no option to ignore DPA requirements. It is a legal requirement. However, if one seems to ignore the same, they risk paying fines, as per Article 83 of GDPR, up to $20 million or 4% of their total annual turnover of the preceding year.
In addition to fines and penalties, a data breach can make a company lose its reputation and the trust of its customers.
Stay compliant by partnering with an Employer of Record like Skuad
To avoid the costs and other consequences of noncompliance, global companies can work with an international partner such as an employer of record (EOR) like Skuad. Employers of record can be the legal employer of a foreign company’s employees, allowing foreign companies to tap into local employment markets without establishing a local legal entity.
Book a demo to see how Skuad can help your company hire and pay remote international contractors and employees in compliance with all the relevant laws and regulations.