How Employers Can Support Parents Through Neonatal Care Leave And Pay

The introduction of Neonatal Care Leave and Pay in April 2025 marked one of the most compassionate changes to UK employment law in recent years. For the first time, parents whose babies require hospital treatment in the early weeks of life have a clear, statutory right to take paid time away from work while their child receives medical care.

For employers, this new right represents both an opportunity and a challenge. It enables workplaces to demonstrate genuine support for parents during what can be one of the most distressing times of their life, yet the legislation itself is intricate, and requires careful navigation of eligibility rules, pay thresholds and the way neonatal leave interacts with other forms of parental leave.

Here, we explore how these new rules work in practice and how employers can support affected staff with both legal accuracy and genuine empathy.

Understanding the entitlement

Neonatal Care Leave is a day-one right for employees whose baby is admitted to neonatal care within 28 days of birth and remains there for at least seven continuous days. The entitlement applies to babies born on or after 6 April 2025 and is taken in addition to maternity, paternity, adoption, or shared parental leave.

Statutory Neonatal Care Pay, however, is not a day-one right. To qualify, employees must have at least 26 weeks of continuous service and earnings above the Lower Earnings Limit. The pay is available for up to 12 weeks and is calculated at the lower of £187.18 per week (subject to annual review) or 90% of average weekly earnings.

For employers, the difference between leave and pay is crucial. Even where pay is not due, employees may still be entitled to take leave. Clear communication is therefore essential to avoid misunderstanding and maintain trust during an already sensitive period.

Who qualifies

Eligibility is deliberately broad, reflecting the diverse ways families are formed. Biological parents, adoptive parents, intended parents in surrogacy arrangements, and partners of the child's mother all fall within scope. The trigger is the baby's admission to a neonatal care unit, which may include special care baby units, intensive care units, or equivalent hospital departments providing specialise medical support for newborns in the early days of life.

If an employee has multiple births within the same pregnancy (such as twins and triplets), any (or all) of those babies could have stays in neonatal care which accrue Neonatal Care Leave and Pay. Any or all of the babies may also have multiple admissions, provided they fulfil the eligibility criteria. If there is an overlap in admission between two or more of the babies, any overlap of 7 or more days will trigger an entitlement which will be attributed to one of the babies and not to each of them separately. This is because the parent would spend the same period caring for the babies whose stay in neonatal care overlaps, so a stay of one week for the babies at the same time in neonatal care would lead to one week of Neonatal Care Leave and Pay entitlement for the parent.

If a baby is discharged and later readmitted, a new entitlement may arise, so long as the second admission occurs within the first 28 days after birth and lasts at least seven continuous days. The only exception is where the baby's readmission falls short of the seven-day threshold, in which case no new right is created.

How neonatal leave works

The structure of neonatal leave is flexible and designed to accommodate the unpredictable nature of hospital care. During the period when the baby remains in neonatal care, or within the week following discharge, parents can take Tier 1 leave in weekly blocks. This phase allows interruptions if the parent wishes to use another form of statutory leave, such as paternity or shared parental leave.

Once the baby has been home for more than a week, Tier 2 leave begins. This must be taken as a single, continuous block. All neonatal leave must be used within 68 weeks of the child's birth, allowing families to align it with ongoing treatment, recovery, and the transition back to family life at home.

Interaction with other statutory rights

The most complex part of the new regime is how it dovetails with existing forms of parental leave. Maternity and adoption leave take priority, meaning that employees must complete those periods before starting neonatal leave. This structure protects the integrity of existing rights while ensuring the new entitlement acts as an additional safeguard.

By contrast, paternity and shared parental leave can overlap with or interrupt neonatal leave. This flexibility helps parents to manage care between them, but it also means employers need to be alert to varied and overlapping patterns of absence. Payroll and HR systems should be adapted accordingly.

In the saddest situations, where a baby dies in neonatal care, employees may still qualify for parental bereavement leave. At such times, empathy and privacy should guide an employer's approach far more than process or policy.

Pay and employer recovery

The guidance on Statutory Neonatal Care Pay is precise and technical. It is based on the employee's average weekly earnings and must be paid in arrears, then reported through HMRC. The good news for employers is that these payments can be reclaimed.

Smaller employers, with total Class 1 National Insurance contributions under £45,000 in the previous tax year, can recover 108.5% of the payments. Larger employers can reclaim 92%. Record-keeping therefore becomes essential. Employers should retain evidence of each payment and ensure payroll and HR teams understand how to complete the relevant HMRC submissions correctly. Errors at this stage can be costly to untangle later.

Managing complex or sensitive cases

Few families experience identical circumstances. Some employees may face multiple births, others may have a baby who is readmitted to hospital, while some may narrowly miss the qualifying period for statutory pay. There may also be added complexity where adoption or surrogacy is involved and documentary evidence takes longer to confirm.

In each case, employers should strike a careful balance between consistency and discretion. Applying the policy rigidly can be legally safe but personally damaging. Allowing unpaid leave where statutory pay is unavailable, or offering flexible working arrangements during a return-to-work transition, can go a long way to maintaining trust and goodwill. It also reflects the moral intent behind the legislation, which is to protect families, not simply to regulate them.

Creating a supportive culture in practice

The law provides the framework, but the way an organisation applies it will define how it feels for those affected. Employers who review their family leave policies now, update them clearly, and train managers to respond sensitively will find that the process becomes much smoother in practice.

Managers are often the first people approached by an anxious parent, and the way that first conversation is handled will often determine how supported the employee feels throughout their leave. Maintaining compassionate communication while the employee is away, and easing their transition back to work, reinforces a culture of trust. The most effective employers are those who view neonatal leave not as an administrative burden, but as part of a wider commitment to workplace wellbeing.

Risks of getting it wrong

As with any statutory right, failure to implement the rules correctly can lead to legal exposure. Employers who miscalculate pay, misapply eligibility criteria, or treat employees less favourably because they have taken neonatal leave could face claims for unlawful deduction of wages, discrimination, or detriment. Yet the greater risk is reputational. An employer who appears unsympathetic in the face of a family crisis may find that trust within the workforce is eroded far beyond the immediate situation.

In a landscape where employee wellbeing and equality are increasingly tied to brand reputation, getting neonatal care leave right is both a legal necessity and a moral imperative.

Handle with care

The introduction of Neonatal Care Leave and Pay has changed the way workplaces respond to some of the most difficult experiences a family can face. It acknowledges that parenthood does not always begin smoothly, and that employers have a part to play in helping families through those early weeks.

For many organisations, the challenge now lies in implementation, and effectively translating the technical rules into policies and decisions that feel fair, flexible, and humane. When handled thoughtfully, this new entitlement becomes more than a legal duty, it becomes a chance to show compassion in action and to strengthen the kind of workplace culture that defines a truly responsible employer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.