Supporting Parents: A Guide to the Neonatal Care and Pay Policy for Small Businesses

If you run a small business, you’ve probably already dealt with the many layers of employment law and HR policies that come with managing a team.

One of the newer developments employers need to be aware of is the Neonatal Care (Leave and Pay) Bill. This policy is a real step forward in supporting working parents, especially those dealing with the unexpected and often distressing experience of having a baby in neonatal care.

In this blog, we’ll walk through what the Neonatal Care and Pay Policy is all about, how it affects small businesses, and most importantly how you can implement it practically, compassionately, and compliantly.

What Is the Neonatal Care and Pay Policy?

The Neonatal Care (Leave and Pay) Bill received Royal Assent in 2023 and came into force in April 2025.

The aim of the policy is to support parents of babies who need specialist care after birth, usually in a neonatal intensive care unit (NICU) by giving them the right to additional leave and pay.

This legislation gives up to 12 weeks of paid leave for eligible parents whose baby requires hospital neonatal care. Importantly, this leave is in addition to other leave entitlements like maternity, paternity, or shared parental leave.

The idea is to take the pressure off parents who are going through a difficult and emotional time, giving them the time and space to focus on their baby without worrying about work or finances.

Who Is Eligible?

Parents may qualify for neonatal leave and pay if:

• Their baby is admitted to hospital for neonatal care

• The baby is under 28 days old at the time of admission

• The hospital stay lasts for at least 7 continuous days

Leave will be available to parents regardless of how long they’ve worked for the business.

However, neonatal pay will follow the usual eligibility rules for statutory payments:

• Employees must have at least 26 weeks’ service by the end of the 15th week before the baby is due

• They must earn above the Lower Earnings Limit (currently £125 per week)

Key Features of the Policy

Let’s break down what’s actually included:

• Leave Length: Up to 12 weeks

• Paid Leave: Paid at the statutory rate (currently £187.18 per week or 90% of average weekly earnings if lower)

• In Addition to Existing Leave: This leave does not replace maternity/paternity leave it’s extra

• Flexible Use: Can be taken in blocks or all at once, depending on the situation and business agreement

• Job Protection: Employees returning from neonatal leave will have the same protection as those returning from maternity leave

Why It Matters for Small Businesses

While this may seem like another box to tick, it’s actually an opportunity to show your commitment to employee wellbeing. For small businesses, your people are your greatest asset and when they feel supported, they’re more likely to stay loyal and engaged.

Implementing this policy properly can:

• Build trust and goodwill among your team

• Boost your reputation as a responsible and caring employer

• Help with staff retention and morale

Let’s be honest, running a small business means spinning lots of plates but getting ahead of this now will make life easier in the long run.

How to Prepare and Implement the Policy

Here’s a step-by-step guide to getting your small business ready:

1. Understand the Law

Familiarise yourself with the key dates:

• Implementation: April 2025.

2. Update Your Policies

Update your employee handbook or contracts to include neonatal care leave and pay. Make sure your HR documents clearly state:

• What the entitlement is

• Who qualifies

• How employees should apply for it

• What happens when they return to work

3. Review Payroll Systems

You’ll need to ensure your payroll system can accommodate this type of statutory pay. Work with your payroll provider to set things up ahead of time. If you do payroll in-house, factor in how you’ll calculate and report this pay, especially if it's being claimed back via HMRC.

4. Train Managers

Line managers need to be clued up. Offer some training or a guidance document so they know how to support employees who may need to use this leave. Make sure they’re comfortable having sensitive conversations.

5. Plan for Cover

This is often the trickiest bit for small teams. Think about:

• Cross-training team members

• Temporary cover

• Outsourcing short-term tasks

While no one likes the idea of losing a team member at short notice, having a plan in place means you can respond quickly and keep things ticking over.

6. Create a Supportive Culture

This isn’t just about ticking a legal box. It’s about making sure employees feel supported during what could be one of the most difficult times of their life.

Simple things like checking in, offering flexibility, and making space for return-to-work catch-ups can make all the difference.

Timescales: What You Should Do and When

Now

• Factor neonatal pay into budgeting conversations for next year

• Finalise and publish updated policies

• Brief your managers and team

• Test your payroll system’s capability

• Communicate clearly with employees so they know their rights

From April 2025:

• Be ready to receive requests

• Apply the policy consistently and fairly

• Record neonatal leave and pay accurately

• Monitor feedback and adjust your processes if needed

Final Thoughts

We know it can feel overwhelming when new employment laws come into effect, especially for small business owners wearing many hats. But neonatal care leave and pay is one of those policies that really reflects the kind of workplace culture most of us want to build: supportive, understanding, and human.

With a little preparation, you’ll be more than ready to support employees through difficult times and that support will likely be returned in loyalty, motivation, and trust.

Need help putting your policies together or making sure you’re compliant? Drop us a message we’re always happy to help small businesses make sense of HR.

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