Neonatal care leave is here – What it is and how to prepare

Many of us have been personally affected by the difficulties of needing neonatal care for newborns.

Whether we’ve supported friends through their distress or watched anxiously over our own children, we all know that statutory neonatal care provision for parents has been sorely lacking.

The introduction of statutory neonatal care leave and pay under the Neonatal Care (Leave and Pay) Act 2023 is, therefore, a welcome piece of legislation.

For the first time, employers will be legally required to provide crucial financial and emotional support to parents whose babies require specialist neonatal care.

Preparing to manage your workforce and payroll processes in light of these changes is about more than just compliance.

It’s about promoting the physical, mental, and emotional wellbeing of your employees – hugely important for all businesses.

By going above and beyond to care for your staff, you’ll ensure every employee feels supported, reassured, and valued.

What is neonatal care leave?

Eligible employees will be able to take up to 12 weeks of leave and statutory pay if their baby requires neonatal care.

Crucially, neonatal care leave can be taken in addition to existing maternity, paternity, or shared parental leave – ensuring that parents don’t have to sacrifice spending time with their newborns after they leave the hospital.

Neonatal care leave applies to parents of babies:

• Admitted into neonatal care within 28 days of birth.
• Remaining in hospital for a continuous period of seven full days or longer.

This leave will be a day-one right, meaning employees can access it from the start of their employment, and it will be available across the whole of the UK – enabling as many parents as possible to benefit from this vital support.

Neonatal care pay

While leave is available from day one, statutory neonatal care pay is subject to:

• Length of service: Employees must have worked for you for a minimum period.

• Earnings threshold: Employees must earn at least £125 per week.

For the 2025/26 tax year, statutory neonatal pay will be £187.18 per week or 90 per cent of the employee’s average weekly earnings (whichever is lower).

However, you may choose to offer a more generous package of neonatal care pay to your employees.

If you have the capacity to do so, this could make a huge difference to your employees.

What should employers do now?

Around 60,000 parents are expected to benefit annually from neonatal care leave and pay.

Now that we are in the new tax year, your employees could request neonatal care leave at any time.

If you haven’t prepared your systems already, it is vital that you do so now.

As a matter of urgency, you must review and update your payroll systems to ensure your software is ready to process statutory neonatal care pay accurately, including earnings thresholds and pay rates.

You also need to consider how you will manage workforce flexibility now that employees have up to 12 weeks additional leave.

Furthermore, you will need to budget for the addition of neonatal care pay to your statutory leave costs, particularly if you plan to offer a more generous pay package.

In addition to this, we strongly recommend that you:

• Update HR policies and handbooks: Make sure you communicate the new neonatal care leave entitlement to your employees, including how they can apply for it.

• Provide employee support: Parents facing neonatal care are likely to be under extreme emotional distress. Offering clear guidance on their rights, alongside additional support such as counselling services or flexible working options, can make a meaningful difference to your employees and help foster a supportive workplace culture.

• Train managers and HR teams: Ensure relevant staff members not only understand the legal framework, but are equipped to handle neonatal leave requests with sensitivity, consistency, and compassion. Implement clear guidelines to help staff avoid missteps during emotionally charged situations.

If you need help managing your payroll and budgeting for the extra costs of neonatal care pay, our expert accountants are here to provide practical support.

Why supporting neonatal care leave matters for employers

Neonatal care leave will be of substantial benefit to parents of newborns requiring neonatal care.

While the ability to support your employees is the main benefit of this reform, you will also benefit as an employer.

A statutory framework removes the ambiguity of ad hoc leave requests, which will help you manage absences and pay reliably.

Additionally, compassionate workplace policies can strengthen staff morale and foster long-term loyalty and retention, helping to reduce staff turnover costs.

The new neonatal care leave entitlement sits alongside other family-friendly developments, such as enhanced flexible working rights and carer’s leave.

Staying informed and championing employee care policies will help to position your business as a supportive, family-friendly workplace.

Perfect payroll with Butterworth Barlow

We all welcome the introduction of vital neonatal care leave and clear statutory guidelines.

However, managing the changing regulations and compliance requirements of payroll can be a challenge.

At Butterworth Barlow, we offer a comprehensive payroll service designed to take the stress out of paying your employees and ensure your business meets its obligations seamlessly.

We can help you adapt your systems to accommodate the new neonatal care leave entitlement and ensure your employees get the right financial support during a difficult time.

Let us take care of your payroll so you can focus on growing your business and creating a compassionate workplace environment for all your employees.

For further advice on the neonatal care leave entitlement, contact our expert payroll team today.