The Neonatal Care (Leave and Pay) Act 2023

Author: Catherine Hare

The Neonatal Care (Leave and Pay) Act 2023 will provide employees’ statutory rights to neonatal care leave and statutory neonatal care pay, and will come into force on 6th April 2025. This new framework is a game-changer for working parents, offering much-needed support when newborn babies requiring neonatal care.

Key provisions in the Neonatal Care (Leave and Pay) Act 2023

This new piece of legislation will provide an entitlement to additional leave as a day one right to thousands of working families with babies in neonatal care. Below is a summary of the key points of statutory neonatal care leave (NCL):

•         An employee is entitled to one week of NCL for each qualifying week their child spends in neonatal care, up to a maximum of 12 weeks. It must be taken in weekly blocks.

•         The neonatal care must begin within 28 days of the child’s birth and last for a continuous period of at least seven days (not including the day on which care starts).

•         The employee must have a qualifying parental or other personal relationship with the child. NCL may be taken where a child has been adopted, including from overseas, as well as in parental order (surrogacy) cases.

•         Neonatal Care Leave may be taken in addition to other types of statutory family leave but must be taken within the first 68 weeks of a child’s birth.

•         Employees must comply with the notice requirements.

•         Employees have the right to return to the same job (or, in certain circumstances, to return to a suitable and appropriate alternative job).

•         Employees are protected from detriment or dismissal relating to NCL

•         Employees who are taking or have recently returned to work from NCL are entitled to be offered suitable alternative employment on redundancy in priority to other employees.

Neonatal Care Leave is divided into two tiers.

Tier 1 covers the initial period of neonatal care, from the beginning of care until seven days after the newborn stops receiving it. If the newborn stops receiving care but then resumes neonatal care within 28 days of birth a subsequent Tier 1 period begins. During this time, parents can take leave in non-consecutive weeks allowing them to be present during the most critical moments without the pressure of worrying about their absence from work, or having to take unpaid leave or annual leave. For parents to start neonatal leave they must give their employer notice before they are due to start work on the first day of absence in that week. Notice during a Tier 1 period does not need to be in writing. It is open for the employer and employee to waive the strict notice requirements, in which case the period of NCL will begin on a date which is mutually agreed.

Tier 2 begins after the Tier 1 period ends and extends up to 68 weeks after the baby’s birth. This period is designed for longer-term support, and those entitled to the leave need to take it in one consecutive block. This ensures that parents can fully dedicate their time to their baby’s ongoing needs without the disruption of intermittent leave. Employees must give notice in writing if they wish to be absent in a Tier 2 period. The specific notice requirements for Tier 2 period is set out below:

• For a single week of NCL, no later than 15 days before the first day of leave to which the notice relates.
• For two or more consecutive weeks of NCL, no later than 28 days before the first day of leave to which the notice relates.

Notice periods can be tricky for employees to understand therefore it is important for employers to have a clear policy outlining the different notice periods.

Statutory Neonatal Care Pay

Alongside an entitlement to leave, the Neonatal Care (Leave and Pay) Act 2023 also provides for parents to be eligible for statutory neonatal care pay (SNCP). Below is a summary of key points:

•         The employee must have a parental or other personal relationship with a child who is receiving, or has received, neonatal care. This includes adoption and parental order cases.

•         The neonatal care must begin with 28 days of the child’s birth and last for a continuous period of at least seven days.

•         The employee must have at least 26 weeks’ continuous service ending with the “relevant week”. The relevant week in birth cases is the week immediately preceding the 14th week before the Expected Week of Childbirth, in adoption cases the week in which the adopter is notified of being matched with the child for the purposes of adoption and in any other cases, the week immediately before the week in which the neonatal case starts.

•         The employee must have received normal weekly earnings, for a period of eight weeks ending with the relevant week, of not less than the lower earnings limit.

•         SNCP is paid at the same rate as statutory paternity pay or statutory shared parental pay.

•         SNCP may be paid for a maximum of 12 weeks and is payable within the first 68 weeks after the child’s birth.

•         Employees must comply with the notice requirements.

Parents will be eligible for statutory neonatal care pay if they are an employee. The definition of an employee for the purposes of Statutory Neonatal Care Pay is a person who is gainfully employed in Great Britain either under a contract of service or in an office (including an elective office) with earnings. This definition extends neonatal pay to a wide range of people including most agency workers, apprentices and those working under the age of 16.

Employer considerations

Employers must carefully consider several factors when implementing the neonatal care leave and pay provisions, as these new requirements introduce both legal obligations and practical challenges that could impact various aspects of the company’s operations.

Workforce planning

Firstly, employees will typically take NCL at the end of their other parental leave entitlements, unless their leave is interrupted. While the intention of this legislation is to extend the overall period of leave available to parents, employers may encounter situations where eligible employees choose to end their maternity leave once statutory maternity pay (SMP) ends at 39 weeks and transition directly to NCL and Statutory Neonatal Care Pay for up to 12 weeks. This could result in some employees effectively taking almost a full year of paid leave, albeit at the statutory rates for those employers who do not enhance. This could be challenging for employers, as it may lead to significant staff shortages and disrupt day-to-day operations, especially if multiple employees take extended leave at the same time.  Time off with a neonate will undoubtedly be something that all organisations will appreciate is needed as a family and to provide support during this undoubtedly difficult time, however organisations will need to ensure that suitable temporary replacements are found or workloads are distributed, which may lead to increased costs and potential strain on existing staff.

Importance of policies

Employers will need to have a clear policy setting out the statutory right to neonatal care leave and pay, as well as any enhanced rights they may offer. This policy should be easily accessible and provide detailed information about the process for requesting NCL and the entitlements available. To streamline the process, employers should consider creating a template form for employees to complete to fulfil the notice requirements. Additionally, if an employer offers enhanced payments for other types of family leave, it will be necessary to assess and think through the impact of NCL on these enhancements to ensure consistency and fairness across different types of family leave and avoid any inadvertent indirect discrimination.

Enhancement considerations

Some employers have already announced early implementation of a neonatal leave and pay policy, while others may now look to enhance their offering following the full details of the statutory scheme being confirmed. Many businesses will likely choose to provide these enhancements on a discretionary basis, tailoring their benefits to meet the needs of their workforce and stay competitive in the talent market. Offering enhanced pay or additional leave can be an attractive benefit for employees, helping businesses attract and retain top talent, especially in industries where work-life balance is highly valued. However, employers will need to carefully assess the financial and operational impact of such enhancements, ensuring they align with the business’s goals, culture, and resources. Communicating these enhancements clearly to employees will be essential to avoid misunderstandings and ensure that everyone is aware of their entitlements.

HR and line manager training

Given the complexities of this new right, it may be a good opportunity for employers to offer refresher family leave training for their HR staff and line managers, particularly in relation to the nuances of the notice requirements. Determining the correct level of notice an employee must give and whether the employee falls within Tier 1 or Tier 2 can be complex. HR teams will need to be equipped with a clear understanding of the regulations and processes to ensure that they can effectively manage any leave requests. Providing additional training will help ensure compliance with the new legislation, reduce the risk of errors, and enhance the overall experience for both employees and the company.

Redundancy – priority status

Employers will need to also be aware that if a redundancy situation arises at any of the following times and it is not practicable by reason of the redundancy for the employer to continue to employ them under their existing contract, the employee is entitled to be offered a suitable alternative vacancy with the employer. The “relevant times” for these purposes are during a period of NCL and during the protected period. The protected period begins with the day after the employee has taken six consecutive weeks of NCL and ends after a period of 18 months beginning with the day on which the child was born, placed for adoption or (for adoptions from overseas) entered GB. Employers will need to ensure that they track employees who take this type of leave in the same way as other types of parental leave, so that they are alive to their obligations during a redundancy process.

Data handling

Employers must ensure that details of the baby’s medical conditions are treated sensitively and handled with the utmost care and confidentiality. The employee’s wishes should be respected when it comes to sharing information about the reason and nature of the leave they are taking.

Wellbeing considerations

Wellbeing considerations are crucial, as the effects of a traumatic birth or a baby spending time in neonatal care can lead to both physical and mental health challenges, potentially resulting in long-term conditions or illness. Employers should be particularly mindful of any changes in an employee’s performance, behaviour, or attendance following such experiences. Taking a proactive approach when the employee returns to work is essential to understanding what support they may need. When considering requests for time off or increased sickness leave, employers should proceed with care, recognising the potential risks of disability discrimination, as the employee may be protected under the Equality Act 2010.

Final thoughts

The implementation of the Neonatal Care (Leave and Pay) Act brings significant changes that will support parents during an incredibly challenging time but also requires employers to navigate a range of legal, operational, and wellbeing considerations. From ensuring compliance with new leave entitlements and pay to offering appropriate support for employees returning to work, employers must be proactive in adapting their policies and practices. Clear communication and sensitivity to the needs of affected employees will be essential in creating a supportive workplace. By addressing these challenges thoughtfully, employers can foster a positive work environment while meeting the legal requirements as outlined in the Act.