What does the new Neonatal Care Act mean for businesses?

Receiving Royal Assent on the 24th of May 2023, the UK’s Neonatal Care Act extended leave and pay rights for any relevant person or parental figure with a close relationship to a baby needing neonatal care.

Under the Neonatal Care (Leave and Pay) Act 2023, eligible employees are entitled to an additional 12 weeks of leave and pay on top of existing entitlements.

Here’s a recap of all the information an employer should understand about this legislation, and all the other relevant things to consider when offering this type of leave.

Summary of key provisions

What is the purpose of the new Neonatal Care Act?

Some births are more difficult than others, which is why neonatal care exists. A neonatal care unit will treat a number of different medical conditions, whether these are identified before the baby is born or are genetic, inherited or congenital diseases.

If a baby has had a difficult birth, they might be separated from their parents shortly afterwards. This can be an incredibly challenging period, as the new baby receives care, which is where Statutory Neonatal Care Leave (SNCL) comes in.

The new Neonatal Care Leave and Pay Act allows parents a period of time to spend with their new baby as it’s being cared for, while looking after their own well-being too. It also means these employees can avoid eating into their existing maternity, adoption or paternity leave.

When did the Neonatal Care Act come into effect?

Neonatal care leave (NCL) had been promised in many a party manifesto, but was finally introduced following the backing of a Private Member’s Bill.

The legislation received Royal Assent on the 24th May 2023, and its new rights and regulations came into force in April 2025, which means eligible employees can now take advantage of this type of leave.

While the NCL regulations are now law in the UK, it’s important to note that this doesn’t apply to Northern Ireland, where employment law is devolved.

What are the implications of the Neonatal Care (Leave and Pay) Act?

In dealing with the practical applications of the Act, employers should be concerned about eligibility criteria, entitlement limits, and the various administrative requirements.

Who is eligible for Neonatal Care Leave? 

The eligibility criteria for neonatal care leave (NCL) and pay is similar to those for paternity or shared parental leave. Employees with a parental or other close personal relationship with the baby in question will have a right to the entitlement.

The definition of ‘neonatal care’ is now set out in the regulations, and covers medical care received in a hospital, palliative care, or specific medical care received elsewhere (such as at home) under the direction of a consultant following a hospital stay. Crucially, the entitlement only applies to babies receiving seven or more consecutive days of such care in the first 28 days after birth.

In the case of multiple births (such as twins or triplets), the regulations clarify that the entitlement does not stack per child if the babies are receiving care simultaneously. The maximum leave therefore remains capped at 12 weeks per employee for the birth event.

What’s important to note is that, like maternity leave, neonatal care is a day-one right for all employees. That means there’s no set period a person is required to be employed to receive this entitlement.

What are the neonatal care leave notice requirements?

Employers must note the distinction between two levels of leave notice. This distinction is often referred to as the two-tier system. During the first tier period, immediate leave must be granted while the baby is receiving neonatal care, often with minimal notice given to the employer.

During the second tier period, usually taken after the child has been first discharged but will require further care, the standard notice periods apply. This section of the regulations is designed for the purposes of balancing business needs with those of parental support.

The following table illustrates how this two-tier system applies:

What are the neonatal care administrative requirements for businesses?

The commencement order bringing this Act into force was issued in April 2025, meaning administrative systems must now be robust. Individuals will now be entitled to full protection in respect of their employment rights.

Employers must remember to handle all evidence sensitively, especially in sad circumstances involving bereavement, and in complex adoption cases, where the legislation also demands work flexibility.

Furthermore, employers should make sure all relevant information regarding eligibility and document requirements is easily accessible to staff in corporate policy documents and employee handbooks. 

The application of the leave and pay requirements means accurately calculating earnings for every week of pay due. Statutory rights will remain valid from the day the leave period starts until the end of all of the weeks taken, ensuring parents will have adequate time away, even if the care lasts for many days. Note that this will apply in relation to every qualifying employee, which is something to consider if both parents work for the same company.

Finally, employers should also be aware of the Statutory Neonatal Care Pay record sheet (NEO2), provided by HMRC, which can be used to keep accurate records of payments made.

What evidence will parents need to provide for neonatal care leave?

Unlike Maternity Leave, which relies on the MATB1 certificate, Neonatal Care Leave and Pay requires parents to provide specific declarations to their employer. To claim statutory pay and leave, employees must generally provide:

• A formal declaration: This confirms they meet the parental eligibility conditions and are taking the time off specifically to care for the child.

• Key dates: The baby’s date of birth, the date the neonatal care started, and the date it ended (or is expected to end).

• Leave details: The dates they wish the leave to begin and the duration (number of weeks).

For Tier 1 leave (taken immediately), this notice can initially be informal (e.g. a phone call or text message) to ensure the leave is not delayed, though employers may ask for formal written confirmation later. For Tier 2 leave and for claiming Statutory Neonatal Care Pay, notice must typically be given in writing. There is a government form (often referred to as the NEO3 declaration) available for this purpose, or employers may provide their own self-certification forms.

Do parents need a letter from the doctor?

For the statutory entitlement, parents do not typically need to obtain a medical certificate or a letter from the hospital (like a fit note) to prove eligibility. The formal declaration (such as the government’s NEO3 form) serves as the evidence of entitlement. However, parents will need to know the precise dates of admission and discharge from their medical team to complete this declaration accurately.

How much neonatal care leave can be given?

While the length of leave taken might depend on how long the baby will be in hospital for, each eligible person is entitled to up to 12 weeks of leave, with a minimum entitlement of one week.

The person must take NCL in the first 68 weeks of their baby’s life. This is similar to shared parental leave, with several options for how they can take this leave. However, as we saw above, the flexibility of how this leave is taken depends on when the person uses it:

• Tier 1 (during care): Leave taken while the baby is receiving neonatal care (or within one week after discharge) is flexible. It can be taken in non-consecutive weeks, allowing parents to return to work and go back on leave if the situation changes.

• Tier 2 (after care): Any leave taken after the Tier 1 period ends must be taken in one continuous block. This is typically added to the end of other forms of parental leave.

How much is neonatal care pay?

While the neonatal care Act makes NCL a day-one right for leave, entitlement to Statutory Neonatal Care Pay (SNCP) has specific qualifying criteria and rates:

• Eligibility: To claim pay, the parent must have completed at least 26 weeks of continuous service with their employer and have average weekly earnings at or above the Lower Earnings Limit, which is £125 per week for the 2025/26 tax year, though this is subject to annual review.

• Rate of pay: Eligible employees will receive the statutory flat rate of £187.18 per week (for the 2025/26 tax year, subject to annual review) or 90% of their average weekly earnings, whichever is lower. This mirrors other forms of statutory parental pay like paternity leave.

Neonatal care checklist for UK employers

To ensure compliance and support employees effectively, use this checklist to review your neonatal care readiness:

• Update policies & handbooks: Ensure neonatal care policies are clear, accessible, and aligned with ACAS guidance.

• Train HR teams: Equip staff to handle sensitive cases involving bereavement or complex medical needs with care.

• Manage leave order: Ensure NCL is taken after other parental leave entitlements (maternity, paternity) have ended.

• Protect against redundancy: Offer suitable alternative vacancies if redundancy occurs; note that protection extends 18 months post-birth if 6+ weeks of leave are taken.

• Guarantee privacy: Respect data protection laws regarding the baby’s medical condition, and avoid prying into sensitive details.

• Prevent unfair dismissal: Ensure no employee is penalised or dismissed for taking NCL, as this is automatically unfair.

• Support well-being: Factor in the emotional toll when assessing performance or absence, and support mental health to avoid discrimination risks.

• Review pay packages: Consider offering enhanced neonatal care pay above the statutory minimum to remain competitive.

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