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When thinking about starting a new business, you will need to consider your privacy obligations. These obligations will vary depending on the: 

  • size of your business;
  • types of data you handle;
  • category of goods or services you sell; and
  • countries that you operate in.

In this article, we examine the life cycle of your business’s privacy obligations and discuss why it is important to think about privacy from the very beginning.

Which Privacy Laws Apply?

The Privacy Act contains the rules with which businesses must comply regarding the handling of personal information. Within the Privacy Act are the Australian Privacy Principles (APPs). These principles apply to:

  • small businesses with an annual turnover of more than $3 million;
  • health service providers;
  • businesses which disclose or trade personal information;
  • service providers under Commonwealth contracts; and
  • credit reporting bodies.

If your business fits into one of these categories, you will be known as an APP entity. APP entities must comply with the APPs. These principles set standards for privacy protection of personal and sensitive information.

Privacy Obligations for Startups

Establishing sound privacy practices from the beginning of your business will set a good foundation for compliance down the track. Even if you have few privacy obligations at the start, this may change as you grow, so you need to be prepared. Establishing good privacy practices also has commercial benefits, including: 

  • impressing potential investors; and 
  • boosting confidence in customers.

Good privacy practices include both internal processes and customer-facing processes. 

Internal Processes

As an employer, you will need to collect data on your employees’ personal information, including:

  • contact details;
  • bank details and tax file numbers;
  • employment and education background; and
  • health details.

An internal privacy manual should set out: 

  • what you use this information for;
  • where it is stored;
  • any situations where you may need to pass it on to third parties, including to Fair Work or other government agencies; and 
  • the process employees should follow to make a query about their privacy. 

Customer-Facing processes 

Regardless of whether you are an APP entity or not, having a clear and up-to-date privacy policy is recommended. 

It is best practice to have a privacy policy if:

  • your business collects personal or sensitive information from consumers;
  • consumers can subscribe to mailing lists through your website; or
  • you sell online.

Your privacy policy must outline what types of personal information you collect and how, exactly, you handle that information.

Your business may not be an APP entity at the start, but you can register to opt into the Privacy Act through the Office of the Australian Information Commissioner (OAIC). Compliance can be straightforward and inexpensive to manage, and by opting in, you will instil confidence in consumers by showing that you take their privacy seriously. 

Small to Medium Businesses

When your business’s revenue increases, you might become an APP entity and will need to comply with the Privacy Act.

When your business grows, you may choose to provide employees with devices like mobile phones and laptops. If someone loses a device, they may also be losing sensitive information. Therefore, your privacy manual should set out what will happen in circumstances where devices might go lost.

You should appoint someone within your business to be the privacy officer. The privacy officer will be responsible for privacy issues within the business, and you will need to contact them if there is a breach. 

If your business is an APP entity, you will also fall under the Notifiable Data Breaches Scheme. Here, there are specific steps you will need to take if a data breach occurs. 

Overseas Privacy Obligations

If you are considering expanding your business to Europe, you may do so by remaining within Australia, but sell to European businesses and consumers.

If so, you will need to comply with the European Union’s (EU) General Data Protection Regulation (GDPR). GDPR compliance is imperative, and you could face fines of up to €20 million or 4% of your annual turnover if you do not follow these principles.

Key Takeaways

Regardless of what stage you are up to in your business’s life cycle, you must comply with the relevant privacy laws. Establishing good practices from the start will set you up for compliance as you grow. Good practices will also limit the risk of fines for breaching privacy laws. If you would like to know more about your privacy obligations, contact LegalVision’s IT lawyers on 1300 544 755 or fill out the form on this page. 


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