Neonatal Care Leave: it’s impact on pay

We’ve covered the implications for neonatal care leave for HR teams. But what about its impact on payroll? Luckily for you, Moorepay have the inside scoop.

From product forums and payroll networks, our Payroll Legislation Manager is able to give you some advice on the trickiest payroll questions surrounding the new neonatal care leave.

This is correct at the time of writing but please stay tuned for updates as payroll professionals are already pushing for some updates to the current guidance.

Eligibility

Who is eligible for Statutory Neonatal Care Pay?

We know the first eligibility tests are based on the same criteria used for SMP/SAP/SPP. So if the employee receives SMP/SAP/SPP they will be entitled to SNP. The relevant week used for Statutory neonatal care pay will align with the relevant week used for SMP/SAP/SPP if the parent is entitled to any of these existing entitlements.

However, if they only meet the employment criteria but do not hit the LEL in the relevant period, then they have another measure of ‘Other’ that will allow the period of assessment to be the week immediately before the week of admittance to neonatal.

When does eligibility start – the due date on the MAT B1 form, or the actual birth date?

The entitlement will apply to children born on or after 6 April – so it is the actual date of birth for eligibility and not the due date.

Does neonatal care have to be a minimum of seven days?

Yes, the criteria as based on 7 days, so 7 days must be achieved for 1 week of leave, 14 days for 2 weeks etc. If the baby is readmitted for a second period within the first 28 days post birth the clock will reset, and blocks of 7 days will have to be achieved in their own right for more leave to be accrued.

Are the declarations of Leave eligibility (relationship and caring) going to be self-certifications, like Shared Parental Leave?

Yes. When giving notice for leave, the parent would need to confirm that they have parental relationship with the child and will use the leave to care for the child. Also for pay, as part of the notice, the parent will give declaration that they have parental relationship with the child and that they have cared for the child or intend to care for the child during the period that pay is claimed for. No documentary evidence would be required. 

What are the exact eligibility criteria under this GB legislation? Does it require employees to be residents of Great Britain, employed by a GB-based employer, or primarily working in or for an employer in Great Britain?

Working out where someone is employed would largely be a case of looking at the facts in each specific situation and considering case law on the topic. Whether an employee would be entitled to Neonatal Care Pay would depend on whether they were classed as working in Great Britain at the relevant time. Whether they would be classed as working in GB would depend on the facts in each case and there is a broad body of case law which would help decide whether someone was working in Great Britain. The employee would also need to have been working in Great Britain for the 26 weeks prior to the relevant week. 

Relevant weeks

How do we determine the ‘relevant week’ for statutory neonatal care leave pay?

The relevant week will align with that of SMP/SPP/SAP.

What is the ‘relevant week’ when the baby is readmitted into neonatal care?

We know the baby can be up to 28 days old when they are admitted into neonatal care. Which means, potentially, the baby might be admitted into neonatal care 2 or 3 times within that timeframe. For example, they may be admitted for nine days, released home for 2, then enter neonatal a second time for a further nine days.

In this case, the ‘relevant week’ is calculated from the first admission into neonatal care and this would still be the relevant week if there was a later readmission into neonatal care. Therefore if the parent is not entitled to any other statutory parental pay, relevant week for any subsequent admission will be the week before the week the child enters into neonatal care the first time around.

Rates of pay

What are Tier 1 and Tier 2 rates? Are they fixed or AWE based like SMP?

Guidance states that weekly rate of neonatal care pay for both Tier 1 and Tier 2 will be the smaller of the following two amounts; (i) £187.18 – Statutory pay rate from 6 April 2025 or (ii) 90% of the normal weekly earnings.

How SNCP interacts with other parental pay

Do we need to allow a week of neonatal pay to be split around another Parental pay record?

For example, if the person has days of neonatal pay, one week of shared parental pay, four days of Neonatal pay.

Pay cannot be split part-week except for payroll accounting purpose only i.e. if a week’s pay straddles 2 pay periods. Leave in Tier 1 can be stopped mid-week to accommodate another pre-booked parental leave but pay cannot be stopped mid-week, payment for the full week will be made before stopping, if required, in order to accommodate another pre-booked leave.

Adoption

How does this affect adoption leave, if the baby they’re adopting enters neonatal care leave?

An adoptive parent would only be eligible for neonatal care leave and pay entitlement if the child has been placed with the adoptive parent at the time of the child being in neonatal care.

What entitlement is there if the adopted baby passes away between neonatal leave and adoption leave?

If the child sadly passes away once the adoptive parent has accrued an entitlement to neonatal care leave and pay, they can take that entitlement within 68 weeks of the child’s date of birth. If the child has not been placed with the adoptive parent at the time of death, then there will be no entitlement to neonatal care leave and pay.

Other

What is Part 12ZE 6(E) Other cases referring to?

We believe this query relates to section 171ZZ16 subsection 6E which states that in “any other case, is the week immediately before the one in which the neonatal care starts”. This subsection means that when the parent is not entitled to SMP/SPP/SAP, the relevant week for neonatal care pay will be the week immediately before the week the child enters into neonatal care.

When do we expect the Regulations to commence the provisions in the Act?

The regulations will come into force on 6 April 2025. Two commencement orders are also required, the first one came into effect in August 2023 (this gave HMRC the necessary powers to make changes to their IT system to incorporate neonatal care pay). The second commencement order came into force on 17 January 2025.

What penalties might apply for non-compliance with Statutory Neonatal Pay obligations, and will there be a grace period for businesses to adapt?

The penalty process for non-compliance is administered by HMRC for all the existing statutory parental pay, and this will include and apply to Statutory Neonatal Care Pay when the entitlement is implemented. The entitlement will come into force on 6 April 2025 and all businesses will need to be ready to implement it from that day.

Where to get more information

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If you missed our recent webinar on Neonatal Care Leave & Pay, you can watch it back here.