Employee circumstances that affect payment of Statutory Neonatal Care Pay
Source: gov.uk (2025-07-07)

Find out how different circumstances can affect how you work out your employee's entitlement and what you pay them.

Earnings affected by a backdated pay rise

If your employee is entitled to Statutory Neonatal Care Pay, and gets a backdated pay rise that increases the amount of gross earnings already paid in the relevant period, you must:
- use the new gross earnings to work their new average weekly earnings
- pay any extra Statutory Neonatal Care Pay due
If they were not entitled to Statutory Neonatal Care Pay, and they get a backdated pay rise in the relevant period, you must:
- use their new gross earnings to work out their new average weekly earnings
- check if they’re eligible for Statutory Neonatal Care Pay (https://www.gov.uk/employers-neonatal-care-pay-leave)
- pay any Statutory Neonatal Care Pay due
Underpayments or overpayments of earnings

If underpayments or overpayments of earnings affect your existing employee’s average weekly earnings, they will also affect their entitlement of Statutory Neonatal Care Pay.

If your employee has been:
- overpaid, they may have received too much Statutory Neonatal Care Pay (and will have to pay it back through payroll)
- underpaid, they have not received the correct Statutory Neonatal Care Pay
If your employee is new, and there are underpayments or overpayments of earnings that affect their entitlement of Statutory Neonatal Care Pay:
- Check if they have documentary evidence agreeing to the amount of Statutory Neonatal Care Pay that should have been paid to them, based on their average weekly earnings.
- Then use the amount that’s been agreed to work out their average weekly earnings for Statutory Neonatal Care Pay.
If there’s no documentary evidence, use their gross earnings to work out their average weekly earnings for Statutory Neonatal Care Pay.

The employee can get advice from the HMRC Statutory Payment Dispute Team (https://www.gov.uk/government/organisations/hm-revenue-customs/contact/statutory-payment-dispute-team).

PAYE Settlement Agreements

If your employee was not eligible for Statutory Neonatal Care Pay because their average weekly earnings were less than the lower earnings limit (https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2025-to-2026) at the end of the relevant week, you must:
- Add up any expenses or benefits included in the PAYE Settlement Agreement (https://www.gov.uk/paye-settlement-agreements) received in the relevant period.
- Include the total amount of any expenses or benefits in their gross earnings.
- Then use their gross earnings to work out their average weekly earnings in the relevant period.
Salary sacrifice

If your employee has a salary sacrifice arrangement with you, use the actual amount of gross earnings paid to them during the relevant period to work out their average weekly earnings.

Statutory Neonatal Care Pay cannot be sacrificed and must be paid in full.

Find out more about salary sacrifice for employers (https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye).

Non-cash benefit

You may pay some of your employee’s earnings with a non-cash benefit, such as board and lodgings, goods or services.

The monetary value of the benefit given to your employee during the Statutory Neonatal Care Pay period cannot be deducted from their pay entitlement.

You must pay any Statutory Neonatal Care Pay in full.

Multiple births from the same pregnancy

Your employee will only be entitled to Statutory Neonatal Care Leave and Pay (if they’re eligible) for a maximum of 12 weeks, even if more than one baby needs neonatal care:
- at the same time
- at separate times
If more than one baby needs neonatal care at the same time, your employee can build up (‘accrue’) their entitlement of Statutory Neonatal Care Leave and Pay for one baby only.

If the babies need neonatal care at separate times, your employee can build up their entitlement of Statutory Neonatal Care Leave and Pay for each of the babies, as long as they each receive at least 7 full continuous days of neonatal care.

Your employee will have up to 68 weeks from the birth of the babies, or from the birth of the first baby (if the babies have different birth dates) to use up their entitlement.

Parental orders and surrogacy arrangements

If your employee is the intended parent in a surrogacy arrangement, they should apply for a parental order to become the baby’s legal parent within 6 months of the baby’s birth.

If they do not apply for a parental order, or it’s not approved, they’re entitled to Statutory Neonatal Care Pay if:
- the baby starts to receive neonatal care within 28 days of being born, and they receive at least 7 full continuous days of neonatal care
- they’ve already built up (‘accrued’) their entitlement of Statutory Neonatal Care Pay
They must take their entitlement within 68 weeks of the baby’s birth date.

Find out about surrogacy and the legal rights of parents (https://www.gov.uk/legal-rights-when-using-surrogates-and-donors).

Adoption disruption

If your employee is the adopting parent, and the adoption is disrupted, they’re entitled to Statutory Neonatal Care Pay if:
- the baby starts to receive neonatal care within 28 days of being born, and they received at least 7 full continuous days of neonatal care
- they’ve already built up (‘accrued’) their entitlement of Statutory Neonatal Care Pay
They must take their entitlement within 68 weeks of the baby’s birth date.

An adoption can be disrupted if, for example, the baby is returned to local authority care or adopted from overseas, but stops living with the adopting parent.

If the baby dies

Your employee is entitled to Statutory Neonatal Care Pay if:
- the baby starts to receive neonatal care within 28 days of being born, and they received 7 full continuous days of neonatal care
- they’ve already built up (‘accrued’) their entitlement of Statutory Neonatal Care Pay
They must take their entitlement within 68 weeks of the baby’s birth date.

They may also be eligible for Statutory Parental Bereavement Pay and Leave (https://www.gov.uk/employers-parental-bereavement-pay-leave).

Employee is not returning to work

If your employee tells you that they’re not returning to work after they’ve taken their Statutory Neonatal Care Pay, you must carry on paying them their entitlement of Statutory Neonatal Care Pay.

You cannot ask them to pay any of it back.

Employee leaves before Statutory Neonatal Care Pay is taken

Your employee will not be entitled to Statutory Neonatal Care Pay if both of the following apply:
- they leave your employment the week before the Statutory Neonatal Care Pay period, or earlier
- they were not continuously employed by you from the end of the relevant week
Employee returns to work after they have served in the armed forces (reservist)

If your employee returns to work within 6 months of serving in the armed forces, they may be able to get Statutory Neonatal Care Pay under The Statutory Neonatal Care Pay (General) Regulations 2025 (regulation 21) (https://www.legislation.gov.uk/uksi/2025/376/regulation/21/made), even if they did not work for you during the continuous employment period.

To work out their continuous employment period, add together how long they:
- worked for you before they served
- work for you after they served
Do not include how long they served in the armed forces.

Employee is reinstated after dismissal

If your employee would have met the eligibility criteria for Statutory Neonatal Care Pay, but you dismissed them during the continuous employment period, you must pay them what they’re entitled to, if you re-instated them:
- because an employment tribunal has decided that they were unfairly dismissed
- after deciding the outcome of a formal grievance procedure
Breaks in employment

If your employee is eligible, you must pay them Statutory Neonatal Care Pay if they have an ongoing contract of service, and there is a break in the continuous employment period for the following reasons:
- they’re sick or injured — but only if the total period is 26 weeks or less
- they’re on maternity, paternity, parental, adoption or parental bereavement leave, and they’ve worked for you before and after
- it’s a public holiday
- you had no work to give them if they’re on a casual or short-term contract, or they’re an agency worker
Find out about the different rules of entitlement for some employment types (https://www.gov.uk/guidance/how-different-employment-types-affect-statutory-neonatal-care-pay).

Employee is sick

If your employee is sick for more than 7 days during the Statutory Neonatal Care Pay period, you must check whether they should get Statutory Sick Pay (https://www.gov.uk/statutory-sick-pay) instead of Statutory Neonatal Care Pay.

If they get Statutory Sick Pay, you must tell your employee that they’re not eligible for Statutory Neonatal Care Pay (https://www.gov.uk/guidance/tell-an-employee-that-theyre-not-eligible-for-statutory-neonatal-care-pay-neo1).

When their Statutory Sick Pay period ends, you can start paying them Statutory Neonatal Care Pay again.

Your employee will lose their entitlement of Statutory Neonatal Care Pay for the period that they get Statutory Sick Pay, they will not be able to carry it over.

Employee goes abroad

If your employee leaves Great Britain (England, Scotland and Wales) during the Statutory Neonatal Care Pay period, you must keep paying any outstanding Statutory Neonatal Care Pay, as long as the baby they’re caring for goes with them.

Employee works for another employer

Your employee should tell you if they work for another employer.

You must check whether they were employed by the other employer:
- during a week they’re claiming Statutory Neonatal Care Pay
- before or after the relevant week
If they’re working for another employer after the relevant week, and they’re not liable to pay them Statutory Neonatal Care Pay, you must stop paying Statutory Neonatal Care Pay from the start of the week in which they work for the new employer.

If they’re working for another employer after the relevant week, stop paying your employee Statutory Neonatal Care Pay, your liability to pay ends from the start of the week that they work for the other employer.

You must tell your employee that they’re not eligible for Statutory Neonatal Care Pay (https://www.gov.uk/guidance/tell-an-employee-that-theyre-not-eligible-for-statutory-neonatal-care-pay-neo1).

If your employee dies

If your employee dies during the Statutory Neonatal Care period, you should pay Statutory Neonatal Care Pay for the week in which they die, but not for any week after that.

Industrial action

Industrial action does not break the continuous employment period.

If your employee is on strike due to industrial action, the weeks or part weeks that they were supposed to work for you, but did not, do not count towards the 26-week employment period up to the end of the relevant week.

Employee is arrested or in prison

Your employee must tell you if they’re arrested (held in custody) or in prison.

Do not pay Statutory Neonatal Care Pay for any time your employee is under arrest or in prison.

You must tell your employee that they’re not eligible for Statutory Neonatal Care Pay (https://www.gov.uk/guidance/tell-an-employee-that-theyre-not-eligible-for-statutory-neonatal-care-pay-neo1).

You must pay your employee Statutory Neonatal Care Pay if:
- they voluntarily help the police with their enquiries
- they’re released from custody without being charged
- they’re out on bail, and not charged
- their prison sentence is suspended
- they’re found not guilty of an offence and released
- they’re convicted of an offence, but do not receive a custodial sentence (do not go to prison)