Guide to GDPR compliance

Adhering to GDPR is a legal requirement for any business handling personal data. It’s not just about dodging fines, though. Nailing compliance is a vital way to build customer trust and safeguard the data of your staff. 

However, dissecting the legal language and navigating the complex rules may seem like a tall hill to climb, especially if you’re starting a business for the first time.

To make compliance a breeze, this beginner-friendly guide covers everything you need to know about GDPR in layman’s terms. We break down the core principles that underlie GDPR, outline what practical steps you need to remain compliant, and importantly, address the risks you can face if you don’t.

What is GDPR and why should small businesses care?

The General Data Protection Regulation (GDPR) is a sweeping law that protects the personal data of individuals. Specifically, it sets rules for how organisations collect, use, and store personal data, from names and email addresses to video footage, whether it’s on paper or in a digital format. 

For example, when you apply for a job with a CV, GDPR ensures that the company must have a clear and specific reason for holding the data. They can’t just add it to a marketing list without your consent. Similarly, if a CCTV camera records you, the organisation using the cameras must have a valid reason for collecting and storing it to remain compliant, such as for security purposes. 

Since the EU GDPR officially came into effect in 2018, the law has transformed the landscape of data privacy across Europe by reshaping the way businesses handle personal information. After Brexit, the UK implemented its own version, UK GDPR, which closely mirrors the original EU regulation. 

Adhering to GDPR is a legal obligation and a strategic business decision. As consumers become more savvy about where they share their data, businesses that demonstrate transparent data collection are more capable of building trust and improving their reputation. Becoming GDPR compliant also forces organisations to audit their data handling practices, which can reduce the risk of data breaches. 

But the most convincing reason for compliance is to avoid financial penalties. The Information Commissioner’s Office (ICO) has the power to issue fines of up to £17.5 million or 4% of a company’s global annual turnover, whichever is greater, for serious breaches. Such fines are big enough to damage or bankrupt a business, making non-compliance a huge risk for any small business handling personal data.

What are the GDPR principles?

Seven core principles lie at the heart of the UK GDPR, informing the legislation and laying out a framework for fair and lawful data processing. 

Understanding them is essential when it comes to remaining compliant with data protection laws, so here’s what they mean in the context of your business. 

• Lawfulness, fairness, and transparency: personal data must be processed in a legal, fair, and open manner. For example, you process payroll data because you have a contractual obligation to pay your staff. 
• Purpose limitation: personal data should only be collected for specified, explicit, and legitimate purposes. For instance, you’re able to collect medical information from employees to manage their leave of absence, not for any other reasons. 
• Data minimisation: you should only collect the minimum amount of data necessary to achieve your desired and specified purposes. If you wanted to create a company-wide staff directory, you’d only be able to collect essential information like work email addresses and desk phone numbers.
• Accuracy: you should ensure that the personal data you collect is accurate and up-to-date. All reasonable steps should be taken to ensure accuracy, including regularly verifying payment and contact information. 
• Storage limitation: you shouldn’t hold personal data for any longer than is necessary for your intended purpose, unless it’s for archival, scientific or historical research purposes. For instance, you should delete the CVs of unsuccessful candidates after around six months of accepting them.
• Integrity and confidentiality: personal data must be processed in a highly secure way and be protected against unlawful access, loss, or damage. This is crucial for sensitive data, such as healthcare or financial information. Learn more about correct payroll processes in our guide to payroll.
• Accountability: you, as the data controller, are responsible for demonstrating that you comply with these principles by having the appropriate processes and records in place. This involves having clear internal policies and training staff on best GDPR practices.

What do small employers need to comply with GDPR?

If you’re starting a business for the first time, GDPR compliance might seem complex and even a little daunting. However, by breaking the task down into clear, actionable steps, compliance doesn’t need to be a headache. 

Here are some pointers to help you get started. 

Understand what personal data you collect

First things first, you’ll need to conduct a data audit to understand what personal data you handle, collect, and store.

Make a list of all the personal data you process, from employee and customer information to website user data. You’ll also need to identify where you’re storing data. I.e., are you storing information in digital locations like company laptops and cloud storage platforms, or in physical filing cabinets? 

Pick your lawful basis for processing

Under GDPR law, you must have a valid legal reason for processing personal data, which is referred to as a “lawful basis”. There are six legal bases to choose from, and you must decide on your basis before processing the data. 

These bases include:

• Consent: an individual has given you permission to process their data. 
• Contract: processing data is necessary to fulfil a contract.
• Legal obligation: you are required to process the data to comply with a law.
• Vital interests: processing data is necessary to protect someone’s life.
• Public task: you need to process the data to serve the public interest.
• Legitimate interests: you have a genuine reason for processing the data, and your interests don’t override the individual’s rights. 

Write a simple privacy notice

To adhere to the first principle of GDPR, ‘transparency’, you’re required to tell people what data you’re collecting, why you need it, and how you intend to use it. 

This can be done easily by writing a privacy notice stating what data you hold (for example, payroll records or contact information), the lawful basis for processing it, and how long you will keep it for. It should be written in plain language and displayed in visible locations like the footer of a website or an employee handbook. 

Train your team

To ensure your business remains GDPR compliant, you’ll need to train your employees on their data handling responsibilities, especially those working in departments that manage sensitive information like HR and payroll administration. 

Your training should cover the fundamental concepts of data protection, like how to create strong passwords, recognise phishing emails, how to handle data access requests from individuals, and the risks of sharing data with AI chatbots.

Secure your systems

You have a legal obligation to store personal data safely and securely. The best way to reach this aim is by implementing appropriate technical and organisational security measures. 

There are no one-size-fits-all security measures; the right solution for you will depend on the nature of your business. However, some common examples include only using reputable cloud storage services, carefully limiting who can access sensitive files, and ensuring all company devices are password-protected.

Know how to handle a data breach

Data breaches refer to any incident where personal data is unlawfully or accidentally lost, destroyed, or disclosed. They could be caused by a malicious hacker, or by a member of staff losing a laptop or sending an email to the wrong person. 

To minimise the potential fallout, all businesses must have a plan for how to respond quickly and effectively to a data breach. This plan should involve fixing the vulnerabilities that may have caused the breach, taking steps to prevent additional loss, and reporting the event within 72 hours of becoming aware of it.

GDPR and your staff: recruitment, records, and monitoring

Collecting personal data from your staff is a necessary part of running a business, but it isn’t risk-free. Here’s some advice on how to stick to the rules, from hiring and onboarding to day-to-day operations. 

Recruitment

To comply with the ‘data minimisation’ principle, you should only collect essential personal information during the recruitment process. 

For instance, while obtaining contact information and details about professional and educational history will be essential, you don’t need to ask for a candidate’s date of birth or marital status unless it’s strictly relevant to the job.

Your job advertisements should also include a privacy statement, which clearly explains what data you’re collecting, why you’re collecting it, and how you plan to use and store it.

Records

Employers have a lawful basis for processing employee data. This permits you to collect and store information needed to manage their employment, from emergency contacts to payroll details.

However, while collecting certain personal data is your legal right, you need to be mindful about how you store documents. For instance, “special categories” or data like performance records and health information need to be provided with extra care.

You also have a legal duty to retain certain information for specific retention periods after your employee leaves. After this period has passed, it’s your responsibility to destroy this data securely.

Monitoring

In certain circumstances, it’s necessary to monitor the activities of your staff, whether through time-tracking software or CCTV. This can feel like a grey area, but the GDPR lays out clear rules around the practice. 

First and foremost, you need to be transparent. Inform staff that they are being monitored, what data is being collected, and for what purpose. This can be done through a clear privacy notice or by outlining the policy in a separate document.

You also must have a justifiable reason for keeping tabs on your staff. For instance, while recording CCTV footage in the stockroom is a proportionate measure to discourage theft, monitoring staff in a break room is considered an unnecessary breach of privacy.

What happens if you break GDPR rules?

Staying on top of GDPR might sound like a chore, but the consequences of failing to comply can be significant. 

The Information Commissioner’s Office (ICO) is responsible for enforcing the UK GDPR. It is entitled to impose fines of up to £17.5 million or 4% of a company’s global turnover, whichever is higher, for serious violations. However, the standard maximum fine is up to £8.2 million, or 2% of a company’s annual turnover. 

The ICO isn’t just cracking down on big fish, either. According to a 2025 report by Solicitor Connect, small and medium-sized enterprises (SMEs) now account for 40% of enforcement actions, with the average fine being £85,000.

Small law firm DPP Law Ltd was slapped with a £60,000 fine in April 2025 for security malpractices, which led to a data breach. This case is just a drop in the ocean of actions being taken against small businesses in the UK. 

In addition to fines, the ICO can also issue warnings, reprimands, and may even ban data processing activities in extreme cases. While the latter action is a last resort, suspending data processing is enough to bring a business to a standstill, and is a powerful testament to how serious the ICO takes GDPR compliance.

Compliance, without the complexity

GDPR is much more than a list of rules — it represents a fundamental commitment to protecting personal data. 

In 2025, more data is being collected than ever, fueled by the sharp rise of AI and IoT technologies. GDPR provides the legal guardrails for this new frontier, helping businesses handle personal data ethically and with respect for individual rights. 

Following the playbook doesn’t need to be a headache, either. As long as you understand the core principles that underpin the regulations, develop a clear strategy around data collection, and adopt a proactive approach, compliance can become a natural part of your day-to-day operations.