Neonatal Care Leave and Miscellaneous Amendments Regulations 2025

Considered in Grand Committee

17:07:00

Moved by

That the Grand Committee do consider the Neonatal Care Leave and Miscellaneous Amendments Regulations 2025. Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee

My Lords, I am delighted to bring these regulations, which were laid before the House on 2 January, forward under the Neonatal Care (Leave and Pay) Act 2023, which originated as a Private Member’s Bill during the previous Parliament. I pay tribute to Stuart McDonald—the former Member for Cumbernauld, Kilsyth and Kirkintilloch East—and the noble Baroness, Lady Wyld, for successfully steering that Private Member’s Bill through the various stages in both Houses to secure Royal Assent in 2023. The Act establishes new statutory entitlements to neonatal care leave and neonatal care pay for employed parents if their child starts to receive neonatal care within 28 days after birth and goes on to spend seven or more continuous days in care. These regulations are another step towards the implementation of neonatal care leave and pay in April this year, and they are the first to be brought before the Committee under the powers of the Act. Currently, there is no statutory entitlement for parents of children who require neonatal care. Until now, parents in this difficult situation have had to rely on using other existing rights, such as maternity leave or annual leave, in order to be there to care for their baby and to support their partner. This approach has caused additional stress for parents. Some mothers have reported that they had to leave work because they were not ready to return at the end of their maternity leave. Because paternity leave is limited to two weeks, some fathers and partners have to rely on statutory unpaid parental leave or the compassion of their employers in order to take time off work. Around 40,000 babies spend over one week in neonatal care each year. Once neonatal care leave and pay comes into force in April 2025, we estimate that around 60,000 parents will be eligible and that around 34,000 parents will take up paid neonatal care leave each year. What do the SIs do? Neonatal care leave will enable eligible parents to take a minimum of one week and a maximum of 12 weeks of leave, in line with the number of weeks for which their baby receives neonatal care, on top of their other parental leave entitlements. Neonatal care leave will be a day 1 right for employees. Statutory neonatal care pay, like other family-related pay rights, will be available to employees who also meet continuity of service and minimum earnings tests. Eligible employees must have worked for their employer for at least 26 weeks ending with the relevant week and must earn, on average, at least £125 per week before tax. If eligible, the parent will be able to claim a flat rate of £187.18 per week in the 2025-26 financial year, or 90% of their average earnings, whichever amount is lower. Employers will administer the statutory payment on behalf of the Government. Small employers will be able to recover 103% of their statutory payment from the Exchequer, while larger employers can recover 92% of payments, and will therefore incur wage-like costs equivalent to 8% of the statutory payments they make. A similar arrangement applies for all other existing statutory parental payments. Together, these regulations will provide protection and support for parents at an incredibly challenging time. These entitlements provide a floor, and employers can and should go further if they are able to. We have consulted extensively with stakeholders, including charities and business representative organisations, to ensure that these regulations balance the needs of parents and businesses. These groups agreed that the proposed reforms would provide substantial benefits to businesses, including retaining the skills and knowledge of their current employees. I will now explain a few points of detail in the regulations. These have been developed through consultation, including with the Department of Health and Social Care and NHS professionals. We have designed a definition for neonatal care that encapsulates the different ways in which babies receive it, going beyond the walls of hospitals and including outreach care. This could include care that takes place within the family home, provided it meets the relevant criteria. We have included outreach care in the eligibility criteria to capture the many ways in which babies receive care, and also to prevent a postcode lottery, where parents of children who receive the same clinical treatment may qualify in one area, as they receive treatment in hospital, but not in another, as they receive treatment at home through an outreach care programme. To ensure that as many parents as possible are eligible, the definition of “parent” in the regulations encompasses adoptive parents, foster-to-adopt parents and intended parents in surrogacy arrangements. Those who meet this definition would also be required to have responsibility for the upbringing of the child and be caring for the child at the time of taking their leave and pay. Having a baby in neonatal care is a difficult experience for any parent, whether the baby is admitted for one day or for many months. However, this entitlement will focus on parents of babies who experience prolonged stays in neonatal care, as they will be in most need of additional support. The qualifying period of neonatal care, as set out in the Act, will be a minimum of seven continuous days beginning on the day after the one on which the care starts. Starting the clock at 00.01 am—one minute past midnight—of the day after the child is admitted creates a consistent approach that does not vary from baby to baby.

17:15:00

The total amount of statutory neonatal care leave and pay available to parents will be capped at a maximum of 12 weeks. The maximum amount balances the needs of businesses alongside the needs of parents. It is also worth noting that the entitlement will be in addition to the other entitlements to parental leave and pay that parents may already be eligible for.

The leave and pay can be taken in two tiers. Tier 1 leave and pay can be taken when the baby is receiving neonatal care and for one week after they stop receiving care. This leave can be taken at short notice, allowing parents to act flexibly in an emergency. Tier 2 leave and pay can be taken after the baby has left neonatal care. Therefore, taking the leave requires more prescription, to ensure that the needs of employers are balanced against the needs of the employee. This approach provides flexibility for parents and crucially allows them to work around existing leave entitlements, such as maternity or paternity leave.

Employees will need to give notice to take leave and pay and provide their employer with the information set out in the regulations. The method depends on in which tier they take the leave. When the employee wants to take leave in tier 1, the employee will need to notify their employer before they start work on the first day of absence, or as soon as possible thereafter. For pay, notice must be given within 28 days, beginning with the first day of the week in which pay is being claimed.

When the employee wants to take leave in tier 2, they will need to give notice 15 days in advance for one week of leave and 28 days in advance for two or more weeks of leave. This is because leave in tier 2 can be more easily planned. The same notice requirements will apply for pay. There is no requirement for parents to provide proof of their child receiving neonatal care. To make a claim in respect of pay, the employee may need to provide a signed self-declaration.

Parents who are out of the workforce on family leave for extended periods may be more at risk from redundancy when they first return to work. We have therefore ensured that parents on neonatal care leave will be protected from redundancy, and those who have taken six continuous weeks of neonatal care leave will also be protected until their child turns 18 months old.

We anticipate that there will be some impact on businesses with regard to familiarisation with the policy and managing the impact of employee absences. Like other family-related pay entitlements, employers will be responsible for administering the statutory payment on behalf of government. Overall, we estimate that the net annual recurring cost to business is £22.5 million. We also anticipate there will be a one-off familiarisation cost to business estimated at £4.7 million. Despite these costs, we anticipate that there will be further benefits to businesses, as there is evidence showing that workplaces offering a range of extensive family-related policies are more likely to have above average performance relative to workplaces without such practices. My officials are also working with HMRC to ensure there is clear guidance on GOV.UK to support employers in implementing the policy.

Before getting into the substance of the regulations today, I take this opportunity to flag a correction slip. Page 20 in the statutory neonatal care pay SI contains an error in the signature block, which refers to the commissioners for HMT rather than the commissioners for HMRC; we require concurrence from the latter and have therefore amended the signature block to reflect this.

I take this moment to thank all those who have been involved in the development of neonatal care leave and pay, including charities such as Bliss, The Smallest Things and Working Families, for their tireless campaigning work and support. I hope they are as proud as I am of the difference that this will make to hard-working families. I therefore commend these regulations to the House.

My Lords, I rise to support these statutory instruments wholeheartedly, and thank the Minister for setting them out so comprehensively and clearly. It was a great privilege to sponsor the Neonatal Care (Leave and Pay) Bill in this House. I am most grateful to Minister Justin Madders in the other place for writing to let me know that these SIs would be introduced. The definition of neonatal care that the Government have arrived at is very good. Clearly, a lot of meticulous work went into that. At the end of last year, I finished serving on the Preterm Birth Committee, so brilliantly chaired by the noble Lord, Lord Patel. I reflect that, as with this Bill, it is so important that policy developments are rooted in the experience of families, as the Minister set out. As she said, these families are going through the most difficult situation. I shall try to keep my remarks brief, but I wanted to put on the record my thanks to all the organisations and campaigners—and particularly the parents who told me their stories, and who have come back now and said what an impact this change will have. I thank Bliss for its briefings and for keeping up the pace on this. I reflect that, when the parents have come and campaigned, they have never asked for the world. They appreciate that, as the Minister said, one has to balance the needs of employers and employees, which is why the consultation with stakeholders that she referred to was so important. This has been one of the best examples of cross-party working. When I came to this House, I never thought that I would work with the SNP, but it was a real pleasure so to do with Stuart McDonald in the other place in the last Parliament. I am proud that it was a Conservative Government that backed this Bill, but I also want to be generous of spirit and pay tribute to the Labour Party. When it was in opposition, it was incredibly helpful in getting this through. It was designed in close consultation with employers. As the Minister said, we always said that we hoped that employers would go further where and when they could. I just reflect that, as we go into future discussions about employee relations, dialogue is absolutely essential to ensuring that we can produce outcomes that everybody can get behind. The Minister will be aware that groups of families will not be able to access this pay because of their different employment statuses. Can she say something about what the department is doing to look at what we might do in the future on that? She talked about making sure that HMRC is prepared, which will obviously involve raising awareness of these regulations and this change. Bliss and others have done a great job, but there is more we can do to make sure that parents know they are entitled to this—just to ease that anxiety. This provision should make a real difference to many families—and families have told me that it would have done, if it had been there when they went through this. I hope that a lot of families will be spared some of the stress and worry that comes at the most difficult time. I thank the Minister once again for bringing these instruments before the Committee.

My Lords, I thank the Minister for her comprehensive introduction of these regulations. We on this side of the Committee support the introduction of these statutory instruments. As my noble friend Lady Wyld mentioned, the Conservative Party made a clear and firm commitment in its 2019 manifesto to introduce neonatal care, and it would be very remiss not to join the Minister in praising my noble friend Lady Wyld for her sponsorship of this Bill through the House of Lords. Her commitment was instrumental in delivering the Act, and she deserves enormous praise for that. It is with a measure of cautious optimism that we now find ourselves in a position to support these measures—so long as we continue to build on the sensible and pragmatic improvements to workers’ rights that we, as Conservatives, introduced during our time in government. It was under our stewardship that we introduced shared parental leave, which affords families greater choice and flexibility. We also instituted carers’ leave, which granted employees valuable time off to care for their loved ones. Furthermore, we championed flexible working arrangements, giving both employers and employees the autonomy to determine working practices that best suit their needs. As a result of these reforms, Britain now boasts one of the most generous systems of maternity and paternity leave anywhere in the world, ensuring that families are afforded the opportunity to spend vital uninterrupted time with their newborns. These advancements were not made in isolation; they were achieved, as my noble friend Lady Wyld said, through active dialogue and consultation with businesses and employees alike. That is how changes of this type should always be introduced; the Government may wish to take note. I turn to the effects of this instrument, which aims to support employed parents of children born on or after 6 April 2025 whose babies require at least seven days of neonatal care within 28 days of birth. This measure is clearly a step forward, offering up to 12 weeks of paid leave for parents—one week for each week a child spends in neonatal care. The Official Opposition support this but there are questions to consider. How will the Government ensure that businesses, particularly small and medium-sized enterprises, manage these measures? Will the Government provide sufficient guidance and support to help employers navigate these changes smoothly? I notice that the Explanatory Memorandum says that guidance will be published before the regulations come into effect, but can the Minister reassure us that the guidance will be publicised widely and made available to employees? That may go some way to ameliorating the one-off cost of just over £4 million that the Minister pointed out would be an effect of these measures. Additionally, although the Government have provided the statutory payment of £187.18 per week—or 90% of average earnings, whichever is lower—do they think this amount will be sufficient for parents to fully support themselves and their families during these challenging times? As my noble friend Lady Wyld pointed out, we hope that employees go further if they can, but, as she and I have said, we need to bring businesses with us. There are several important questions regarding the scope and accessibility of these regulations. Although the provisions are designed to be inclusive, allowing parents in surrogacy arrangements and adoptive parents to take leave, what steps will the Government take to ensure that employers are fully aware of these provisions? How will they guarantee that leave is genuinely accessible to all those entitled to it, regardless of their work history or specific circumstances? Additionally, although businesses will be able to reclaim a portion of the statutory payment from HMRC, how will this process work in practice? Will the Government provide adequate support to help employers navigate the process smoothly, ensuring that there are no delays or confusion? It is equally important to ensure that there is public awareness. The Government have indicated the development of a communications and stakeholder engagement plan to inform parents, employers and the public about these changes, but how will that work in practice? How will the Government ensure that the information reaches all parents, particularly those who may be unaware of their entitlement to neonatal care leave or pay? Can the Minister guarantee that the plan will be robust enough to reach every eligible family? We support these measures but we must continue to scrutinise their practical implementation. Neonatal care leave and pay represent a significant step forward in supporting families during one of the most challenging periods of their lives. However, as with any new entitlement, the devil may well be in the details. How will the Government evaluate the success of these regulations over the first few years? Will there be a formal review mechanism to assess whether the scheme is meeting the needs of parents and businesses? It would also be most instructive to know how many parents are using this entitlement—whether it is the 60,000 estimated, or more, or less. As I have asked a couple of times, how will the Government ensure that businesses, especially smaller ones, can manage the additional burden of these regulations? Will the statutory pay rate be sufficient for families already facing financial pressures? How will the public and employers be fully informed to ensure that the provisions are accessed effectively? Most importantly, can the Minister comment on the support that may be available to parents in Northern Ireland, as I believe these measures apply only to the mainland? I look forward to hearing the Government’s responses to these questions and to ensuring that these regulations are implemented in a way that truly benefits the parents and children who need them most.

17:30:00

My Lords, I am grateful for the support across the Committee for these regulations. Again, I thank the noble Baroness, Lady Wyld, who rightly paid tribute to the parents and campaigners; I absolutely echo that point. Without that pressure, which all Governments have received, these measures simply would not have come forward. We are very grateful for the campaigners and the parents behind all of this. The noble Baroness also mentioned cross-party working. Private Members’ Bills are often a good illustration of that; I know this from the ones I have been involved in. The noble Baroness, Lady Wyld, asked about the people who might be excluded. That is a good question and goes some way to answering the point made by the noble Lord, Lord Sharpe. We are just setting a minimum standard here, of course. This is a minimum standard, but we encourage employers to go above and beyond it. Many do so already and recognise the benefits that this brings to their businesses. We will keep this whole issue under review; the charities and campaigners will require that of us, I think, going back to the point made by the noble Lord, Lord Sharpe. We will want to see how the rollout goes but this is a good start. As with many regulations, we want to embed this measure before we do any further evaluation of it. The noble Lord, Lord Sharpe, asked about making sure that we have a smooth implementation so that everybody knows what is going on. My officials are working with HMRC to develop and publish guidance on GOV.UK, which will explain the requirements of the legislation. In developing this guidance, we are undertaking user testing to ensure that it is fit for purpose. Ahead of implementation, my officials have been engaging with stakeholders—including employer groups, payroll providers, IT software developers and ACAS charities—and ensuring that we have posters in neonatal wards to advertise the benefits; I hope that that will make sure that the word spreads as widely as it possibly can. I am grateful to the noble Lord for talking about some of the other measures and family-friendly policies that the previous Government introduced. I was pleased to hear about those; I hope that it bodes well for the debates that we are going to have on the Employment Rights Bill when we come to it in due course. In the meantime, the provisions outlined in these SIs will provide for new parents with babies in neonatal care the ability to benefit from additional time off as a day 1 right. We should not lose sight of how important that is. Currently, many working families across the UK are having to return to work while their babies are sick and receiving care. As I said before, some mothers are also having to leave work because they are simply not ready to return to work. These measures aim to address some of the difficulties that thousands of parents face when their babies are in neonatal care or afterwards. They are a huge step forward. We hope that the change in the law will also send a signal of encouragement to employers about the significance of recognising the struggles that parents go through when their very young child is unwell and of the need to provide them with appropriate support in all ways—not just with leave and pay but in other forms of support as well. Of course, I acknowledge that many employers are already providing that support to parents, but there is more that they can do; we all have an education role to play in all of that, I think. In the meantime, I again thank noble Lords for all their comments.

Motion agreed.