Impact of Covid-19 on pro­ces­sing con­tracts: writ­ten form and pro­hi­bi­ti­on on working from home?

In accordance with the gui­de­lines adopted by the fede­ral and sta­te govern­ments to limit social cont­acts, citi­zens are cal­led upon to redu­ce cont­acts with others to an abso­lu­te mini­mum in order to con­tain the coronavirus. 

In the weeks pri­or to the publi­ca­ti­on of the­se gui­de­lines, many com­pa­nies had alre­a­dy assi­gned their employees to work from home if pos­si­ble. Howe­ver, the decen­tra­liza­ti­on of the work per­for­med by the­se employees rai­ses uni­que prac­ti­cal ques­ti­ons and issues in data pro­tec­tion law.

Spe­ci­fi­cal­ly, it rai­ses the ques­ti­on of how assig­ning employees to work from home can affect the con­clu­si­on and per­for­mance of pro­ces­sing contracts.

Do pro­ces­sing con­tracts have to be signed by hand on paper?

What should be done if employees who are aut­ho­ri­zed to sign for the com­pa­ny are working for home but have no way to print out, sign and return an ori­gi­nal copy of the pro­ces­sing con­tract to the other par­ty? Our view is that the con­tract does not have to be signed by hand. Rather, e.g. an e‑mail exch­an­ge of PDF docu­ments is suf­fi­ci­ent if the par­ties’ intent to be bound by the con­tract and the refe­ren­ced docu­ments are cle­ar­ly evi­dent from the e‑mail correspondence.

In accordance with Artic­le 28(9) of the GDPR, pro­ces­sing con­tracts must be set down in wri­ting, alt­hough this may gene­ral­ly be done in an elec­tro­nic for­mat as well. Howe­ver, it is unclear whe­ther any other spe­ci­fic requi­re­ments can be deri­ved from Artic­le 28(9) of the GDPR with respect to the form of the con­tract. It is neces­sa­ry to con­sider whe­ther con­tracts with pro­ces­sors have to be signed by hand in every case (which would be con­sis­tent with the writ­ten form requi­re­ment in accordance with the Civil Code). Arguing against this view is the fact that Artic­le 28(9) rela­tes to the draf­ting of the con­tract, not to its sig­ning (i.e. its con­clu­si­on). Moreo­ver, an exami­na­ti­on of how the terms “wri­ting” and “elec­tro­nic” are used else­whe­re in the GDPR makes clear that the draf­ters of the Regu­la­ti­on likely did not have in mind a writ­ten form requi­re­ment like the one which we know from Ger­man civil law. For exam­p­le, the clau­se rela­ting to the pro­vi­si­on of infor­ma­ti­on, Artic­le 12(1) of the GDPR, sta­tes that infor­ma­ti­on is to be trans­mit­ted in wri­ting or in ano­ther form, even elec­tro­ni­cal­ly if appro­pria­te. It is gene­ral­ly ack­now­led­ged that the requi­re­ment for pro­vi­si­on “in wri­ting” does not mean that the data pri­va­cy state­ment has to be draf­ted by hand: rather, it may be prin­ted out ins­tead. In the inte­rests of ensu­ring that terms are appli­ed con­sis­t­ent­ly within the GDPR, the same under­stan­ding should app­ly within the bounds of Artic­le 28(9) of the GDPR. This argu­ment is tenable in light of the fact that requi­re­ments for writ­ten form could have more than one pur­po­se, and that in the case of pro­ces­sing con­tracts, law­ma­kers were likely con­cer­ned more with ensu­ring that agree­ments bet­ween the par­ties are docu­men­ted than with war­ning the par­ties against over­hasty con­clu­si­on of the agreement.

This view has been con­firm­ed in prac­ti­ce. In the past, the EU Com­mis­si­on has demons­tra­ted open­ness to various ways in which pro­ces­sing con­tracts can be ente­red into elec­tro­ni­cal­ly. In the view of the Data Pro­tec­tion Aut­ho­ri­ty for the Sta­te of Bava­ria as well, use of a qua­li­fied elec­tro­nic signa­tu­re is not man­da­to­ry, but is rather just one of the pos­si­ble ways in which a con­tract can be ente­red into elec­tro­ni­cal­ly (

Working from home requi­res the controller’s pri­or con­sent. Now what?

In accordance with the model agree­ment on data pro­ces­sing published by the Fede­ral Com­mis­sio­ner for Data Pro­tec­tion and Free­dom of Infor­ma­ti­on­re­qui­res the controller’s express pri­or con­sent in wri­ting, and such con­sent may be issued only after appro­pria­te tech­ni­cal and orga­niza­tio­nal mea­su­res are defi­ned for the pro­ces­sing situa­ti­on (§ 3(9) of the model agreement).

In recent weeks, many com­pa­nies have reas­si­gned many of their employees to work from home at short noti­ce. In many cases, this includes tho­se enga­ged in pro­ces­sing the controller’s per­so­nal data as employees of the processor.

If the pro­ces­sor is con­trac­tual­ly requi­red to fol­low the abo­ve pro­ce­du­re, the ques­ti­on is rai­sed whe­ther this cour­se of action brea­ches the pro­ces­sing con­tract and, if so, what the con­se­quen­ces are of such a breach.

In accordance with Artic­le 28(10) of the GDPR, acting uni­la­te­ral­ly, e.g. wit­hout the controller’s pri­or con­sent, to reas­sign employees to work from home could trans­form the pro­ces­sor into the con­trol­ler (excess of assi­gned tasks or func­tions). The first ques­ti­on in this regard is whe­ther the pre­sent situa­ti­on is even cover­ed by the home office clau­se of the model agree­ment (i.e. by its mea­ning and pur­po­se). One could argue that the (phy­si­cal) loca­ti­on of the pro­ces­sing is what mat­ters, not the place from whe­re employees can access the data. Accor­din­gly, the clau­se would not be brea­ched if the processor’s employees could access the company’s ser­vers remo­te­ly from home and pro­cess the controller’s data the­re. Howe­ver, this argu­ment will likely be rejec­ted. From the view­point of IT secu­ri­ty, any remo­te access to data pres­ents a risk which should be addres­sed by an appro­pria­te clau­se of the con­tract. This clau­se should give the con­trol­ler the oppor­tu­ni­ty to assess the tech­ni­cal and orga­niza­tio­nal mea­su­res which have been taken to ensu­re that its data is pro­tec­ted during pro­ces­sing by employees working from home. The rele­vant clau­se should the­r­e­fo­re be admissible.

A uni­la­te­ral decis­i­on by the pro­ces­sor con­cer­ning the means of data pro­ces­sing does not in and of its­elf estab­lish an excess of assi­gned tasks. In a working paper on the con­cepts of “con­trol­ler” and “pro­ces­sor”, (PDF) the Artic­le 29 Data Pro­tec­tion Working Par­ty ack­now­led­ges that the con­trol­ler is not requi­red to make a detail­ed decis­i­on about every means of pro­ces­sing. But the cri­ti­cal point in this regard is that the con­tract includes an express clau­se to this effect, so that the pro­ces­sor is devia­ting from the controller’s clear ins­truc­tions with regard to the pro­ces­sing pro­ce­du­re. This cour­se of action would likely exceed the bounds set by the Artic­le 29 Data Pro­tec­tion Working Par­ty (cf. p. 31 of the working paper).

At the same time, such a cour­se of action could vio­la­te the GDPR, spe­ci­fi­cal­ly Artic­le 28(3)(a) of the GDPR. While pro­vi­si­ons rela­ting to employees working from home are not a man­da­to­ry com­po­nent of the agree­ment bet­ween the par­ties in accordance with the spe­ci­fi­ca­ti­ons in Artic­le 28(3) of the GDPR, pro­ces­sors having their employees pro­cess data from home may be defy­ing the controller’s ins­truc­tions, even if the rele­vant pro­vi­si­on is not requi­red by law.

In light of this situa­ti­on, the ques­ti­on is how pro­ces­sors affec­ted by the clau­se cited here, or a simi­lar clau­se, should pro­ceed to res­to­re com­pli­ance with the GDPR as quick­ly as pos­si­ble. First of all, they would be well-advised to clo­se­ly exami­ne the rele­vant clau­ses and the con­tract as a who­le. If, for exam­p­le, the con­tract includes a force majeu­re clau­se or allows the pro­ces­sor to obtain con­sent after the fact, such an alter­na­ti­ve may app­ly. If the con­tract does not include such a clau­se, a pos­si­ble breach could still be cured, in our view, if con­sent is issued after the fact, so that the processor’s role is ful­ly res­to­red. If the con­trol­ler refu­ses con­sent, such refu­sal may con­sti­tu­te a breach of trust in light of the processor’s con­trac­tu­al duty of assis­tance towards its employees and may the­r­e­fo­re be imper­mis­si­ble. Howe­ver, a sepa­ra­te exami­na­ti­on of this ques­ti­on is requi­red in each indi­vi­du­al case. The same appli­es for the pos­si­ble assump­ti­on of frus­tra­ti­on of con­tract in accordance with § 313 of the Civil Code, which could enable adjus­t­ment of the con­tract. Howe­ver, the hurd­le which would have to be cle­ared in this case would be hig­her than in the case of retroac­ti­ve con­sent, or con­s­truc­ti­ve con­sent in case of refusal.


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