Neonatal Care Leave and Pay Bill: How Can Businesses Prepare?

Posted on Monday, 18th Sep '23

Duane Jackson by Duane Jackson

As of April 2025, if not sooner, certain areas of the UK will be seeing the Neonatal Care Leave Act taking effect. It aims to offer parents of sick or premature newborns extra support and time with their child instead of heading to work. Both sets of parents could receive up to 12 weeks of additional leave to care for and visit their newborn baby. This could hugely impact fathers too who normally receive two weeks of paid paternity leave. However, this bill will also affect employers.

With changes likely in April 2025, businesses will need to ensure they are well-equipped to embrace this new Leave Act. From payroll compliance to updated policies, companies should prepare ahead of time to ensure staff are supported and operations can run smoothly.

What is the Neonatal Care (Leave and Pay) Bill?

Under the Employment Rights Act 1996, the Neonatal Care Act will be introduced to support employees who have a newborn baby receiving palliative or medical care. It is due to come into effect from April 2025 but could be pushed through sooner.

For employees with a sick or premature newborn, it offers two additional rights:

  1. Entitlement of up to 12 weeks of extra leave
  2. Entitlement to statutory pay during this leave period

The aim of the Bill is to reduce the pressure on parents who must choose between taking unpaid leave to spend time with their ill baby or heading to work to earn money. The Bill will also cover both parents, meaning they can be entitled to up to 12 weeks of paid leave each.

What are employees entitled to?

Employees who fit the criteria for neonatal care leave will be offered additional entitlements if their child requires palliative or medical care within 28 days after their birth. What’s more, employees won’t need any evidence of continual service. Once this care leave has been made law, employers will have to offer it from day one for any employee.

Leave allowance entitlement

When the Act is live, employees can receive up to 12 additional weeks of paid leave on top of any other leave they are entitled to. This means that employees will still get other allowances, such as annual leave and paternity or maternity leave, in addition to neonatal care leave.

Employees won’t be required to take this leave consecutively either. The only restrictions are that they can’t take more than 12 weeks of paid leave and employees must use this within 68 weeks (16 months) of the child being born. However, for parents to be eligible for neonatal care leave, a premature baby will need to be hospitalised and receive care for at least a week.

Statutory pay allowance

Employees will also be entitled to receive a statutory pay allowance during their 12 weeks of leave. Whilst the official figures haven’t yet been confirmed, they’re likely to follow similar patterns to other statutory leave allowances. It’s also possible that allowances will be reviewed and published at the start of every new tax year.

Eligibility criteria for neonatal care leave

Employees will need to qualify to take leave and may need to supply evidence to their employer before being deemed eligible. To qualify for the leave, employees will need to:

  • Have a premature or sick baby receiving medical or palliative care;
    • The care must start within 28 days of the child being born
    • The newborn must have been receiving care for at least seven days

It’s also worth noting that an employee must inform an employer of the intention to take neonatal care leave, where possible before the time is needed to be taken.

What is the legal definition of neonatal care?

According to the Neonatal Care (Leave and Pay) Bill 2023, neonatal care refers to a child receiving medical or palliative care. The legislation specifies that any medical care will have started before the 28th day after the child’s birth.

What will businesses need to consider?

To ensure full compliance, businesses of all sizes will need to review any policies in place prior to the bill coming into effect. Likewise, administrative tasks, such as payroll and HR processes and leave allowance will need to be updated to consider these changes.

It’s worth noting that the Bill isn’t likely to be active until April 2025, but some charities, including Bliss, are pushing for it to come through sooner so businesses will need to prepare ahead of time. Here’s what businesses will need to consider:

1. Leave allowance

It’s key to consider that both parents will be entitled to the same amount of paid leave during this period if they fit the criteria. This allowance is also on top of any agreed maternity and paternity leave, as well as the company’s annual leave allowance and any approved carer’s leave.

There’s also no requirement for employees to take this leave within 12 weeks of their child being born. In fact, parents caring for sick or premature children will be entitled to take neonatal care leave up to 68 weeks (16 months) after the birth of the child.

2. Paid leave rates

At present, paid leave rates are expected to be in line with other statutory pay schemes. The legislation states that neonatal care will be paid at either fixed rates or an earnings-related weekly rate, similar to statutory sick pay and statutory maternity pay.

It will also be the responsibility of the company to pay for this leave. However, it’s expected that an opportunity to reclaim should be available to employers. To best prepare, employers will need to make arrangements with payroll and HMRC before legislation becomes active in 2025. This should give employers plenty of notice to take action, ensuring their HR and payroll systems are ready to accommodate the change and employee requests.

3. The relevant period

The relevant period is used to determine if an employee has earned enough in the eight weeks before their qualifying week; it’s a way of assessing an employee’s eligibility for statutory maternity pay. This immediately becomes problematic for employees looking to take paid neonatal care leave if they’ve already been on another form of leave in the eight weeks prior.

Employees already on parental leave could receive an income that falls below the minimum earnings threshold, especially if they are on statutory paid leave. This could happen when a pregnant employee takes maternity leave early due to complications with their pregnancy, which could automatically penalise an employee, meaning they’re unable to claim neonatal care leave. Under this Act, anyone who falls into this category will automatically have the relevant week changed to the week before neonatal care starts.

4. Maternity and paternity leave

Both maternity and paternity leave will be treated as separate from neonatal care leave. Therefore, employees could have up to an additional 12 weeks’ leave on top of any maternity or paternity allowances. Employers may need to factor this into planning, especially if operational tasks could be impacted by this leave.

There is currently no guidance on whether employers can contest and refuse an employee to take leave. However, the guidelines are likely to be very similar to statutory maternity leave. These could include a written notice to an employer requesting the time off, as well as evidence of the child’s birth and medical records.

5. Operational sites across the UK

The Neonatal Care Leave Act will only be in effect across England, Scotland and Wales, meaning Northern Ireland is exempt from this legislation. Therefore, businesses operating in these three countries will have until April 2025 to prepare for the change. Although Northern Ireland is currently exempt from this law, there has been backing from various politicians for the Bill to be introduced. Nonetheless, companies with operations across all four countries will need to review how it could affect their business.

6. Updated company policies

Companies will need to consider how this will appear in their policies and may need to spend some time updating other relevant policies too. Employers should also consider differences in this paid leave compared to statutory sick leave and maternity leave, especially as neonatal care leave will be granted as a day-one right.

7. Reclaiming for employers

Just like other statutory allowances, employers might also be entitled to reclaim if they reduce their National Insurance Contributions. Larger companies could see 92% of pay reclaimed, whilst smaller businesses may be able to recover 103%. Companies with fewer employees will need to have paid £45,000 or less in gross National Insurance Contributions within the previous tax year.

Staffology can support your business with neonatal care leave compliance

At Staffology, we offer HR and payroll solutions that support businesses with compliance and tracking, especially around allocated leave allowances. Our software enables you to review leave allowance and ensure employees are being paid in line with statutory requirements. Request a free trial today.

Duane Jackson, September 18th, 2023

Related Articles

A Guide to Calculating Annual Leave Pro-Rata

30th Nov '23

All employees are entitled to annual leave. But how much? This blog explains everything you need to know about calculating annual leave pro rata for your employees.

by Duane Jackson

Chat Now