Decoding Data Agreements: A Simple Guide to GDPR Compliance

January 23, 2024

In the dynamic landscape of modern business, the reliance on third-party services for the processing of personal data is ubiquitous. Managing emails, leveraging cloud storage, and analyzing website data all necessitate the establishment of a Data Processing Agreement (DPA) between your organization and any third parties that process personal data on your behalf. In Europe, a requirement for a DPA is mandated by the General Data Protection Regulation (GDPR). Companies subject to GDPR must comply or face significant fines. However, even outside of Europe, DPAs have become a common contractual and risk-mitigation mechanism for ensuring third-party service providers are reliable and can make sufficient data protection guarantees. In this article, we will explain the meaning of a DPA, its significance and key elements to ensure alignment with the European privacy laws.  

What is a DPA?

A Data Processing Agreement, commonly known as DPA, serves as a legally binding contract between a data “controller” and a data “processor.”  

The data controller, often a company or an organization, wears the hat of decision-maker. They determine not only the “why” but also the “how” of processing personal data. So, if your business decides why and how personal data should be handled, congratulations – you’re the data controller!  

Data processors are third parties that process personal data on behalf of the controller. The term “data processing” encompasses a multifaceted array of activities, ranging from the collection and storage of data to its conversion, formatting, and transformation. Third-party providers, like analytics software, email services, or cloud servers, often play this role. For instance, if you’re using Google Workspace and sharing client information, Google becomes your data processor. Similarly, if a data analytics company collects and analyzes your data, they’re your data processor. 

The primary function of a DPA is to regulate the processing of personal data for business purposes, ensuring that third-party processors adhere to specific guidelines and standards for GDPR compliance. 

Why is a DPA Important? 

Mandatory Compliance Mandate

For organizations under the purview of the GDPR, the establishment of a written DPA with all data processors is not merely a bureaucratic hurdle; it is a fundamental step toward GDPR compliance, serving as a crucial safeguard against potential fines. 

Navigating DPA Requirements

Entities handling data related to EU residents or maintaining business relationships with clients having a European presence are obligated to have a DPA in place. This encompasses a broad spectrum of third-party services, including analytics software, email services, and cloud servers. Even in the absence of regulatory requirements, a DPA allows companies to ensure that third-parties processing their data are qualified and can provide robust data protection assurances. 

Key Components of a DPA  

Article 28 of the GDPR outlines the requirements for a data processing agreement. It specifies that processing by a data processor must be governed by a binding contract or legal act, addressing key aspects such as the subject matter and duration of processing, the nature and purpose of processing, types of personal data, and categories of data subjects. The contract must mandate that the processor: 

a. Documented Processing Instructions: Processes personal data based on documented instructions from the controller, including data transfers to third countries, unless overridden by applicable Union or Member State law. In such cases, the processor must inform the controller, unless prohibited by law on grounds of public interest. 

b. Confidentiality Commitment: Ensures confidentiality commitments from individuals authorized to process personal data or imposes an appropriate statutory obligation of confidentiality. 

c. Security Measures Implements measures required under Article 32, focusing on data security. 

e. Assistance in Data Subject Rights: Assists the controller in fulfilling data subject rights under Chapter III by employing appropriate technical and organizational measures. 

f. Compliance Assistance: Supports the controller in meeting obligations outlined in Articles 32 to 36, considering the nature of processing and available information. 

g. Data Deletion or Return: Allows the controller the option to delete or return all personal data after service provision, including deleting existing copies, unless storage is required by Union or Member State law. 

h. Compliance Information Availability: Provides the controller with all necessary information to demonstrate compliance with Article 28 obligations, facilitating audits and inspections conducted by the controller or an appointed auditor. 

In case the processor believes that an instruction infringes GDPR or other data protection provisions, it must promptly inform the controller.  

Subcontracting by Processors 

If a company that processes personal data decides to bring in another company to help with specific tasks, both companies must comply with strict data protection rules. Where that sub-processor fails to fulfil its data protection obligations, the initial processor remains fully liable to the controller for the performance of that other processor’s obligations. 

Costs of Non-Compliance 

Ever since the implementation of the GDPR, data protection authorities have shown a clear intention to enforce penalties.  Fines can be substantial, reaching up to €20 million or 4% of the company’s global revenue. 

Whether an organization handles data on EU residents necessitating a DPA for GDPR compliance or seeks to establish clear data relationships, consulting legal professionals or utilizing ready-to-use DPA templates proves invaluable. These templates provide a structured framework for navigating the complex landscape of data processing, ensuring clarity regarding the rights and obligations of parties involved. 

In conclusion, the intricate web of GDPR compliance necessitates a deep understanding of the components integral to a Data Processing Agreement. Beyond being a legal prerequisite, a well-crafted DPA serves as a foundational pillar for safeguarding personal data, upholding trust, and fortifying the integrity of businesses operating in the global arena. 

About the Author: 

Roberts & Obradovic Law Firm is a group of privacy lawyers focused on providing prompt expert legal advice and representation on various corporate, privacy, employment, and litigation matters for businesses and individuals. To contact a privacy lawyer, visit their website: