Neonatal Care (Leave and Pay) Act

Employers should now prepare for the official implementation of the Neonatal Care (Leave and Pay) Act, expected as early as April 2025.

Employers must act now to prepare payroll systems, policies, and processes to ensure compliance. Here’s a breakdown of the key updates and what they mean for your business.

What’s being introduced?
The Act introduces up to 12 weeks of paid leave for parents whose child requires neonatal care.

This is in addition to existing parental leave entitlements and is designed to provide financial and emotional relief during their child’s stay in neonatal care.

This benefit is especially critical for parents during the first 28 days after their child’s birth, should they require specialised neonatal care.

Designed to integrate smoothly with existing payroll processes, this statutory allowance aims to provide employees with seamless access to this support from day one of employment.

The Act applies across England, Scotland, and Wales, ensuring a unified approach to neonatal care support across the UK.

What’s the eligibility?
Leave is available from day one of employment, subject to specific criteria. Pay is available if continuity of service and earnings tests are met.

Who qualifies?
Parents, adoptive parents, or carers with main responsibility for the child’s upbringing.

When does it apply?
When a child enters neonatal care within 28 days of birth and stays for at least seven consecutive days.

Structuring pay
The Act introduces a two-tier structure for managing leave and pay:

Tier one: Leave and pay during the neonatal care period or the first week after discharge. This tier allows flexible leave arrangements with minimal notice, enabling parents to respond to their child’s immediate medical needs.

Tier two: Leave and pay from the second week post-discharge up to 68 weeks following the child’s birth. This tier requires leave to be taken in a single block with more formal notice requirements.

What do businesses need to do?
HMRC’s Software Developer Support Team (SDST) have already laid the groundwork for this transition, and payroll product teams are actively implementing these changes. Keep an eye out for further updates from HMRC’s SDST.

It’s essential for employers and payroll providers to stay on top of these developments, updating payroll systems in advance to support this new allowance. Doing so ensures compliance and extends the Act’s intended support to employees who need it most.