In April 2025, family leave will expand to include a significant new entitlement – neonatal care leave and pay.
Brought into law under the Neonatal Care (Leave and Pay) Act 2023 (the Act), the reform aims to provide essential support to parents navigating the challenges of neonatal care.
For employers, however, it brings important obligations regarding payroll compliance and workforce management.
What classes as neonatal care leave?
Neonatal care leave allows eligible employees to take up to twelve weeks away from work if their baby requires specialist hospital care.
The key conditions are:
- The baby must be admitted to neonatal care within the first twenty-eight days of birth.
- Hospitalisation must last at least seven consecutive days.
This leave is a day-one right, meaning there is no qualifying service period.
It is offered in addition to other statutory entitlements, including maternity, paternity, and shared parental leave, and applies throughout the UK.
How neonatal care pay works
While leave entitlement is immediate, statutory neonatal care pay is subject to the below criteria:
- A minimum period of continuous employment (specific period to be confirmed).
- Employees must earn at least £125 per week.
For the 2025/26 tax year, statutory neonatal care pay is set at £187.18 per week or 90 per cent of the employee’s average weekly earnings, whichever is lower.
This introduces the need to adjust payroll processes accordingly, ensuring:
- Accurate assessment of eligibility
- Correct application of rates
- Compliance with statutory obligations
Key steps for employers
With an estimated 60,000 parents benefiting annually, the scale of the change warrants early action. As a business owner, you should:
- Review payroll systems – Confirm your software can process neonatal care pay accurately, incorporating thresholds and rates.
- Update HR policies and handbooks – Outline the entitlement clearly, including the process for requesting leave.
- Communicate with employees – Ensure staff are aware of their new rights and how to access them.
- Prepare for workforce flexibility – Plan for potential staffing gaps caused by up to twelve additional weeks of leave. This may include exploring temporary cover, flexible schedules, or job-sharing arrangements.
- Provide additional support – Recognise the emotional strain neonatal care imposes on families. Offering guidance, flexible working options, or access to wellbeing services can be invaluable.
- Train management and HR teams – Equip those responsible for handling leave requests with the knowledge and empathy required.
The business case for proactive preparation
While the legislative driver is to support parents, employers who embrace neonatal care leave stand to gain:
- Clarity in managing absences and pay through clear statutory guidelines.
- Enhanced employee retention and loyalty, as staff value compassionate, family-friendly policies.
- Alignment with broader workplace reforms, including increased flexible working rights and carers’ leave.
By staying informed and adapting early, your business can help to create a supportive, compliant, and modern workplace culture.
For further advice on implementing neonatal care leave into your payroll and policies, please contact our team today.
