Neonatal leave – Are You Ready?

The Neonatal Care (Leave and Pay) Act 2023 received Royal Assent on 24 May 2023. Under the Employment Rights Act 1996, the legislation comes into force in April 2025, and therefore, employers must ensure they are prepared.

In this blog, we take a look at what employers need to do to prepare to not only be compliant but also what they can do to support their employees.

What is Neonatal care?

The word ‘neonatal’ means newborn or the first 28 days of life.

Babies who are born early, with health issues needing palliative care, or after a difficult birth will be sent to a neonatal intensive care unit for round-the-clock care from a team of experts. The length of stay will vary depending on the level of care required, and parents will naturally be highly concerned for their newborn child and likely be alarmed by all the equipment and sounds in the unit.

The Act is intended to support employees with a parental or other personal relationship by allowing them to take additional leave to spend more time with their baby, providing crucial care instead of worrying about returning to work or having to take unpaid leave.

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The New Law from April 2025

At present, this leave applies to employees only. It is hoped that it will be expanded to different types of employment contracts in the future.

Employees will need to meet the qualifying criteria and may also need to supply evidence to their employer before being deemed eligible to take Neonatal Care Leave.

Neonatal Care Leave

From day one of employment, employees who become parents of babies who are admitted into hospital aged 28 days or less will have the right to neonatal leave if the baby is in hospital for a continuous period of 7 days or more and must be taken within the first 68 weeks of the birth.

Both parents will be able to receive 12 weeks of additional leave in addition to other statutory leave entitlements such as maternity, paternity or shared parental leave, and annual leave will continue to accrue. This leave can hugely impact fathers who would normally receive just 2 weeks of statutory paid paternity leave.

Neonatal Care Pay

To qualify for statutory Neonatal Care Pay (NCP) the team member must:

• be an employee
• have a minimum of 26 weeks of continuous service; and
• earn above the lower earnings limit.

The leave will be unpaid if the employee has less than 26 weeks of continuous service.

With any parental leave, employers must assess the employee’s earnings in the 8 weeks before the qualifying week to determine whether they are entitled to statutory pay. Neonatal care will happen after such leave has started, but this may prove problematic as the income could be below the lower earnings limit. For example, an employee who has started Maternity Leave early due to pregnancy-related illness could automatically be penalised as they would be unable to claim Neonatal Care Pay. Under this Act, anyone who falls into this category will automatically have the relevant week changed to the week before neonatal care starts.

The rate of pay is expected to be in line with other statutory pay allowances and will be reviewed in April of each year. If an employer already offers enhancements to other types of Family-Friendly leave, then Neonatal Leave should be considered the same to avoid claims of discrimination.

As with other statutory allowances, employers may be entitled to reclaim if they reduce their National Insurance Contributions (92% for larger companies and 103% for smaller companies). Those companies with fewer employees will need to have paid £45,000 or less in gross National Insurance Contributions within the previous tax year.

Employers have until April 2025 to ensure their systems and payroll are updated to accommodate the changes.

Notice Requirements

Parents must inform employers of their intention to take Neonatal Care Leave at the earliest opportunity. It is likely this will be similar to other periods of parental leave whereby written confirmation and evidence will be required.

The timing of Neonatal Care Leave will be different from other types of parental leave.

It will not be possible to curtail, for example, Maternity Leave. Instead, Neonatal Care Leave will be taken at the end of Maternity Leave (or after the employee has returned to work provided it is within 68 weeks of birth). Employers may find that some eligible employees choose to curtail their maternity leave once statutory maternity pay ends at 39 weeks and then move to Neonatal Care Leave and Pay. This would replace the period of Additional Maternity Leave, which is unpaid, meaning almost a whole year of paid leave. However, others may choose to use the full 52 weeks leave, and then use Neonatal Care Leave, extending their leave further.

Other key points to note

Employers must be understanding and compassionate and ensure Line Managers and HR staff receive training and a clear Neonatal Care Leave and Pay policy.

In relation to redundancy, the Act currently states that the regulations may include a provision for alternative employment to be offered in the event of a redundancy during any period of neonatal leave. At present this is unknown but considering the priority status offered to those on maternity, shared parental or adoption leave, and given that NCL will be taken at the end of such leave, it is a possibility, and will mean the period of redundancy protection will increase further.

The Neonatal Care Leave Act will only be in effect across England, Scotland and Wales, meaning Northern Ireland is exempt from this legislation, although there is backing from politicians for its inclusion. Businesses who operate in all four areas will need to review how this affects them.

Finally, employers should consider how they can support employees during this sensitive time. Talk openly, be compassionate, determine how they wish for news to be communicated and at all times be respectful of their wishes, remembering the baby’s medical conditions are private and protected under data protection legislation.

The effects of a traumatic birth or a baby receiving neonatal care can have a significant impact mentally, and sometimes physically, resulting in a long-term health condition. Consideration should be given to reasonable adjustments such as a phased return to work, or homeworking. Do you have a private healthcare scheme, or an Employee Assistance Programme? If so, ensure you provide the details of those services to the employee to access for further support. Employers must be mindful of this when the employee returns to work, particularly if they notice changes in behaviours or absence rates, as there could be a risk of disability discrimination.

The introduction of this Act is positive news for families and should be embraced, but as with all new legislation, it means lots of work for employers to ensure they are prepared. The team at MAD-HR is already working with clients to support them through this change and will be happy to support other companies that need us.