4 legal challenges companies have to prepare for in 2021

18 Dec 2020

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William Fry’s Leo Moore talks us through the major legal challenges to come in 2021, from international data transfers to the tax implications of remote working across borders.

Businesses are facing a lot of legal and regulatory challenges in 2021. To parse through these, we spoke to Leo Moore, a partner on William Fry’s technology team who specialises in intellectual property, technology and data protection matters.

1. International data transfers

International data transfers have been a hot topic throughout 2020, with the Schrems II ruling as well as Brexit challenging how businesses will transfer data across jurisdictions in the future. Companies and regulators will continue to figure out how to navigate this environment into 2021 but, as it stands, international data transfers are reliant on standard contractual clauses.

“The standard contractual clauses were upheld by the Schrems II decision but its application is much more tightly defined,” Moore explained. “So, as a result, it will be necessary for companies to establish whether or not the jurisdiction to which they want to send personal data is deemed to be essentially equivalent to the data protection laws within the European Union, and that’s no easy task. I think this will take up a lot of focus for companies in 2021.”

In particular, the focus is on international data transfers from the EU to both the US, in the absence of Privacy Shield, and the UK, without its presence in the EU. With Brexit negotiations ongoing, businesses are still awaiting the details that will govern the latter.

“If the UK is not deemed adequate next year, it will make the transfer of information to and from the UK much more burdensome for companies also. I think companies are going to have to therefore assess their arrangements with the UK and may need to put in place new mechanisms for data transfers,” said Moore.

2. New copyright rules

The Digital Single Market of the European Union is also facing significant shifts in the online environment driven by changes to copyright legislation and the liabilities of content providers.

“Those with significant online presence, like a lot of the Big Tech in Ireland, have already been very proactive in preparing for the changes that will come into force in [June] 2021,” Moore said. “But many other companies have yet to really assess how these laws will impact them. Ireland is up against a tight deadline in 2021 to implement the new copyright legislation.”

Large properties that rely on sharing content published by others, such as Google, and those hosting user-generated content, such as Facebook and YouTube, will have the biggest task in conforming to these new rules. But Moore sees a silver lining for creators.

“These reforms are really going to have a significant impact on companies operating in and over the internet who reproduce third-party materials, and then it will also impact positively, I think, on those that produce original content,” he said.

3. Data protection litigation

One thing that has long been expected in 2021 is that the Irish Data Protection Commission (DPC) will start handing down fines following investigations at various large tech organisations based in Ireland. This trend has started with the Twitter decision announced earlier this week, but there is certainly more to come in the new year.

“As sure as one comes along another is sure to follow swiftly behind, and in that regard we understand that another decision on a fine is imminent also, perhaps in January of next year,” said Moore.

But another trend Moore warned companies to look out for is that of data protection litigation by individuals. “Companies that will be the subject of these kinds of claims will need to be aware that they can be directly sued by individuals if they fail to protect the rights of individuals or maybe even suffer a data security breach,” he advised.

4. Remote working

Remote working is expected to continue at strength in 2021, and this will mean that the challenges companies face in digitalisation, cybersecurity and ensuring employee welfare off premises will continue. However, Moore spotlighted an additional challenge facing distributed workforces.

“Staff are, in some instances, working not just from home in Ireland but also from their home in Europe and maybe even further afield throughout the world. This has an impact not only on the international data transfer issues that I’ve already discussed but actually also from a tax perspective,” he explained.

One significant indicator of these tax implications was Google’s request that all staff return to their country of employment – they could continue working remotely, just not across borders. According to Moore, this is because staff working remotely in other countries “may have created establishment issues from a tax perspective”.

So while the vision of working from anywhere takes hold around the world, a new path will have to be forged for companies to enable this from a legal standpoint.

Elaine Burke is the host of For Tech’s Sake, a co-production from Silicon Republic and The HeadStuff Podcast Network. She was previously the editor of Silicon Republic.