Data collection may cause legal ‘hurdles’ for HR, warns law firm

Updated EU data protection regulation may cause trouble for businesses collecting and mining employee data, law firm Allen & Overy has warned.

In its report, The Big Data Think: Data with Destiny, the firm explains that there is presently no specific EU legislation on employee data. However, an EU draft regulation is being drawn up, which includes specific rules around employee data across the EU member states.

The report said: “Employers ready to embrace more sophisticated use of data face some clear hurdles, and, with the regulation still under development, many questions remain unanswered, making it hard to understand what hazards might come with greater innovation.”

At an event launching the report, Allen & Overy partner Sarah Henchoz said under the new regulation employers must have explicit, informed consent to use employee data.

She said organisations would have to create a separate data protection agreement with employees that will “clearly set out what they will be collecting, what they will be using it for, and how long they will keep the data”.

Allen & Overy partner Tobias Neufeld said employers “need to be ready”, as the regulation includes fines and sanctions for the misuse of data – up to 100 million or 5% of annual turnover.

Henchoz suggested employers should think about implementing a re-sign of data protection contracts as part of annual compliance checks. “The re-sign could state [employers] are collecting different data or using it for a slightly different reason, and you are still complying with the new regulations,” she said.

Neufeld agreed that employers should get consent from employees every year on data usage, as it needs to be “tailored with what you want to do with the data”.

He added: “If you want to use all the opportunities HR big data brings, you need to provide another opportunity for employees to give consent. Then staff can also monetise the data, not just the employer.”

Despite the challenges, both Henchoz and Neufeld agree using data with the consent of employees could bring many opportunities to HR, especially in the areas of talent management and retention.

Neufeld said: “[Few] employers have collected the data with that purpose. It has been normal health data or credit scoring. Repurposing the whole thing makes sense for analytics.”

They also suggested health data and awareness of workforce demographics could be used to customise employee benefits offerings.