Neonatal pay

By Katie Carter.
02 Feb 2023

Employers have a great deal to consider when an employee becomes a parent. Those who manage staff will need to ensure maternity leave, maternity pay, paternity leave and paternity pay are all in order.

This year may see the introduction of a new statutory right which will affect parents whose baby is in neonatal care. This is part of the Neonatal Care (Leave and Pay) Bill.

This article explores what a new statutory right would mean for employers and the provisions you should make for your business. For further information read below or, contact our employment law experts today on 01455 858 132.

What is neonatal care?

Neonatal care is a specific type of care which hospitals and health care providers offer to babies born prematurely. This care is also provided to children born with an illness.

Care for the child is provided in a neonatal care unit. A premature baby is a child born before 37 weeks’ gestation. It could also be a baby who is born with a low birthweight.

Thousands of babies are born in the UK each year prematurely or sick, therefore requiring neonatal care. As an employer it’s important that you know how to handle this issue should one of your employees face this situation.

 premature baby holding an adults hand

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

The government is backing new laws providing additional paid leave to parents of babies who require neonatal care after birth.

These reforms are designed to protect the employment rights of parents who need to take leave to care for their baby. Rather than taking unpaid leave, parents will be able to take additional paid neonatal leave to be with their child receiving specialist care.

If the bill successfully passes through Parliament and becomes law, neonatal care leave will become available to employees from their first day of employment.

The current proposal is to extend this entitlement to parents of babies who are admitted into hospital up to the age of 28 days and those who have a continuous stay in hospital of 7 full days or more.

Here is a breakdown of the key takeaways for employers to consider:

Neonatal Leave

The Private Members' Bill, which was introduced through UK parliamentary stages in June 2022, outlines the new statutory entitlements. If it passes, neonatal leave and pay would be available for parents of babies who are admitted to hospital care as a neonate.

Providing the admission to hospital lasts for a continuous stay of seven days or more, parents would be eligible for neonatal leave. The neonatal leave would be available to your employees from the first day of their employment.

Employers must make appropriate provisions during the recruitment process if a new member of staff is due to become a new parent.

If the bill successfully completes, neonatal leave will be available to your employees. The leave is additional to other parental leave such as maternity leave or paternity leave. Employers should prescribe a set period in which neonatal pay and leave must be taken.

Neonatal leave will normally be required to be taken in a continuous block of one or more weeks.

Neonatal Care Pay

Although still in parliamentary discussions, the neonatal leave and pay bill is currently in the second reading. This means that it is expected to come into law in 2023 if it’s successful.

If this happens, neonatal pay and entitlement to statutory neonatal pay will be available to your employees once they have completed 26 weeks' continuous period of employment. They will also need to earn more than the lower earnings limit.

According to parliamentary discussions the rate of pay is likely to be in line with the same standard rates of pay for other types of parental leave and family-related statutory payments (such as maternity pay or paternity pay) or 90% of their average earnings.

The maximum duration of the neonatal pay period will be capped at 12 weeks.

Who does the government define as a neonatal parent?

Who the government decides to define as a neonatal parent is currently under further discussion.

There will likely be additional consultations to which caregivers should be entitled to neonatal leave and pay.

Can employers reclaim the statutory payment?

In order to reduce your national insurance contributions (NICs), employers will be able to reclaim the statutory neonatal payments from the government by reducing their NICs.

If you're a large employer, then you will be able to reclaim 92% of the statutory neonatal pay given to employees.

For SMEs and small employers there is an option to reclaim 103% providing you have paid £45,000 or less in gross NICs to preceding tax year.

What will the notice be for neonatal leave?

The notice requirements for neonatal leave are yet to be finalised. The current proposal is to implement a two-tiered approach. This will allow your employees to give a very short informal notice.

This notice will be deemed acceptable on the basis the neonatal leave is taken very soon after the date of the baby's admission to a neonatal care unit.

If a child has not been recently admitted into neonatal care, then a longer period of notice would be required. As things stand, this is set to be one week.

Are employees’ employment rights protected during neonatal leave?

As with shared parental leave, maternity leave, paternity leave and other family-related leave, neonatal leave will give qualifying employees certain employment rights and protections.

The leave would work on top of other parental entitlements. This means it could be taken following maternity, paternity, adoption and parental bereavement leave, ensuring protected time off.

It is expected the regulations will set out that eligible parents can take neonatal care leave and pay within a 68-week window following their child’s birth.

Parents of a premature or sick baby will be afforded legal protection from detriment or discrimination relating to them taking or seeking to take neonatal leave.

As an employer it is therefore imperative that these rights are upheld in order to avoid claims of unfair dismissal.

 Health care worker caring for a baby

How does the Neonatal Care Bill impact employers?

The UK is host to a number of extremely supportive and flexible employers. You may already be an employer who supports their employees if their child is born prematurely or sick.

However, not all employers can afford to do this. The fact statutory neonatal care pay can be reclaimed means employers will no longer lose out financially. The Bill provides employers with a statutory framework to assist you in supporting your employees.

How should employers prepare for the Neonatal Care Bill?

From a commercial standpoint, employers would certainly benefit from the Neonatal Care Bill. Employees may use alternate means, such as:

  • Unauthorised absences.
  • Unpaid leave.
  • Sick leave, or;
  • Annual leave

In fact, the government’s consultation found a large percentage of employers were favourable towards statutory neonatal leave for exactly this reason. Your business would not be able to reclaim sick pay and there is the impact of losing a valuable employee for a prolonged period.

If approved, the Bill will enable employers to be supportive to parents of babies born prematurely. You should certainly look to update your template contracts to include reference to the new legislation. In general, this sits under the ‘Other Paid Leave’ clause.

You should also look at introducing a new policy within the business to outline neonatal care leave entitlements and the process that employees should follow if they ever need to take neonatal leave.

Employers should therefore be prepared to make necessary amendments to employee handbooks, policies and employment contracts in the coming months.

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

With the rising cost of living presenting many employers and employees with an incredibly challenging time, the Business Minister has backed the reforms and called for urgent change.

The change to legislation was backed in UK parliament on 15th July 2022. Originally, a consultation was published in 2019 which explored the idea of neonatal leave and pay. This was later confirmed in the 2020 budget.

The Neonatal Care (Leave and Pay) Bill is due for a third reading in the House of Commons.  A number of MPs are pushing for it to come into law as quickly as possible.

When will the Neonatal Care Bill come into effect?

The original thinking was that the new statutory rights would be part of an Employment Bill. The government has gone in a different direction, however, and is supporting a Private Members Bill.

The Neonatal Care (Leave and Pay) Bill, is an enabling bill. This means the Secretary of State is empowered to make regulations. The details are not clear as yet and there's no timetable for the implementation. The bill's passage is likely to be confirmed in 2023.

What is the current provision for parents whose baby is in neonatal care?

Existing statutory leave entitlements place pressure on employees with a sick baby undergoing hospital care for a prolonged period. The existing parental leave laws provide little flexibility if a baby is born unwell.

Currently an employee with a child in a neonatal care unit must rely on their existing statutory leave entitlement. The initial government consultation asked for views on the design of this new entitlement. The consultation looked at associated practical considerations, and the implications for employers and employees.

  • Specifically, it asked about:
  • Eligibility and qualifying conditions.
  • The length of entitlement and when the entitlement can be taken.
  • Notice and evidence requirements
  • Employment protections and parents’ right to return to the same job.

Get support from Croner on neonatal leave and pay

You may eventually be faced with an employee whose child has been born premature. This new bill will enable employers to offer support to those employees.

Croner are on hand to help employers update your contracts, documentation and policies to accommodate this upcoming change in legislation. Failure to do so could increase your legal risk and potentially lead to tribunal claims.

With over 80 years’ experience providing award-winning service, Croner’s team of in-house experts can advise on how to offer neonatal leave and pay to your employees.

If you require advice, please contact Croner on 01455 858 132.

About the Author

Katie Carter.

An Employment Law Consultant is happy to help with any complex issue or matter of concern. Katie is confident in providing a best practice or commercial approach to safely reach the required and desirable outcome. Katie has a retail and hospitality background.