SaaS Agreements – FAQs – EU Standard Contractual Clauses

When entering into a SaaS agreement with a SaaS customer a SaaS supplier will often need to transfer customer data that contains EU personal data outside of the EEA. This could be at the request of a SaaS customer or more usually because the SaaS supplier uses a sub-contractor located outside of the EEA to provide part of the services on its behalf (as a sub-processor). For example: a data centre, online customer support centre or email service provider provided by a company located in the USA.
SaaS suppliers and SaaS customers must use EU standard contractual clauses in order to comply with their duties under the GDPR when making such restricted transfers of EU personal data.

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SaaS Agreements – FAQs – Personal Data

It is essential for SaaS providers and SaaS customers to understand what consitutes personal data to ensure that they comply with their respective legal obligations when acting as data controllers and/or data processors. What is Personal Data? Articles 4(1) of the General Data Protection Regulation (“GDPR“) defines personal data as:

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SaaS Agreements – GDPR – Local Derogations

The General Data Protection Regulation (“GDPR”) now applies to all SaaS customers and SaaS companies collecting or processing the personal data of individuals located within the EU. SaaS suppliers and SaaS customers must comply with the terms the GDPR. SaaS suppliers and SaaS customers should be aware that the GDPR does not however fully harmonise data protection law throughout the EU, as each EU country may introduce their own requirements in certain instances (“derogations”) under their own local data protection laws.

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SaaS Agreements – GDPR – Data Processing Agreement

Since the General Data Protection Regulation (GDPR) came into force on the 25th of May 2018, SaaS suppliers and SaaS customers are legally obliged to include a written data processing agreement (DPA) in the terms of their SaaS agreements. The DPA usually forms a schedule to the SaaS agreement and must include the specific and detailed mandatory obligations set out in the GDPR. SaaS suppliers should use their own DPA and resist any attempt by a SaaS customer to have them sign up to the SaaS customer’s DPA for the following reasons.

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SaaS Agreements – GDPR – Age of Consent

The General Data Protection Regulation (“GDPR”) and the new Data Protection Act 2018 (“DPA”) now apply in the UK. SaaS suppliers and SaaS customers must comply with the terms of both the GDPR and the DPA. SaaS suppliers and SaaS customers should be aware that the GDPR does not fully harmonise data protection law throughout Europe, as each EU country may introduce their own requirements in certain instances (“derogations”). SaaS suppliers and SaaS customers who operate in, or collect or process personal data from persons located in different EU countries need to be aware of the different rules in each EU country.

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SaaS Agreements – GDPR – US Companies

From the 25th of May 2018 the EU General Data Protection Regulation (GDPR) will come into force and change existing UK data protection laws. The GDPR does not just apply to SaaS suppliers and SaaS customers located in the EU. The GDPR also applies extraterritorially, i.e. to SaaS suppliers and SaaS customers located outside of the EU, for example in the USA, as set out below.

GDPR Applies to US SaaS Customers and SaaS Suppliers

The GDPR will apply to SaaS suppliers and SaaS customers located in the USA if:

They offer goods or services to SaaS customers located within the EU; or
They monitor the behaviour of EU data subjects;

Even though the SaaS supplier or SaaS Customer is not located within the EU.

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SaaS Agreements – GDPR – The General Data Protection Regulation

The General Data Protection Regulation (“GDPR”) will replace the existing EU Data Protection Directive and harmonise European data protection law from the 25th of May 2018. In the UK the GDPR will replace the Data Protection Act 1998 from the 25th of May 2018, regardless of “Brexit”. This will have a significant effect on both SaaS suppliers and SaaS customers who will need to comply with the terms of the GDPR. SaaS suppliers and SaaS customers must update all contractual documents that involve data processing, such as SaaS agreements, privacy policies and hosting and support agreements to comply with the new rules under the GDPR before the 25th of May deadline.

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SaaS Agreements – GDPR – New German Data Protection Law (BDSG)

The General Data Protection Regulation (GDPR) will replace the existing EU Data Protection Directive and aims to harmonise European data protection law from the 25th of May 2018. In Germany, the Government has already amended the existing German Data Protection Act (BDSG) and from the 25th of May 2018 the New German Data Protection Act (New BDSG) and the GDPR will apply together.

Compliance with the New BDSG

Both SaaS suppliers and SaaS customers who provide services to German clients or who collect or process personal data of German data subjects on behalf of international SaaS clients, will need to comply with the terms of the New BDSG in addition to the terms of the GDPR. The New BDSG sets out derogations from certain parts of the GDPR and additional obligations.

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