Bills & proposals

Upcoming changes to be aware of

More updates on neonatal care leave and pay

Employers should now prepare for the official implementation of the Neonatal Care (Leave and Pay) Act, expected as early as April 2025.

Employers must act now to prepare payroll systems, policies, and processes to ensure compliance. Here’s a breakdown of the key updates and what they mean for your business.

What’s being introduced?

The Act introduces up to 12 weeks of paid leave for parents whose child requires neonatal care.

This is in addition to existing parental leave entitlements and is designed to provide financial and emotional relief during their child’s stay in neonatal care.

This benefit is especially critical for parents during the first 28 days after their child’s birth, should they require specialised neonatal care.

Designed to integrate smoothly with existing payroll processes, this statutory allowance aims to provide employees with seamless access to this support from day one of employment.

The Act applies across England, Scotland, and Wales, ensuring a unified approach to neonatal care support across the UK.

What's the eligibility?

Leave is available from day one of employment, subject to specific criteria. Pay is available if continuity of service and earnings tests are met.

More updates on neonatal care leave and pay

Who qualifies?

Parents, adoptive parents, or carers with main responsibility for the child’s upbringing.

When does it apply?

When a child enters neonatal care within 28 days of birth and stays for at least seven consecutive days.

Structuring pay

The Act introduces a two-tier structure for managing leave and pay:

Tier one: Leave and pay during the neonatal care period or the first week after discharge. This tier allows flexible leave arrangements with minimal notice, enabling parents to respond to their child’s immediate medical needs.
Tier two: Leave and pay from the second week post-discharge up to 68 weeks following the child’s birth. This tier requires leave to be taken in a single block with more formal notice requirements.

What do businesses need to do?

HMRC’s Software Developer Support Team (SDST) have already laid the groundwork for this transition, and payroll product teams are actively implementing these changes. Keep an eye out for further updates from HMRC’s SDST.

It's essential for employers and payroll providers to stay on top of these developments, updating payroll systems in advance to support this new allowance. Doing so ensures compliance and extends the Act’s intended support to employees who need it most.

The Employment Rights Bill

1. Zero-hour contracts The bill proposes to eliminate zero-hour contracts, which may be deemed exploitative, ensuring workers have contracts that reflect their actual working hours and provide reasonable notice for shift changes.

2. Fire and rehire It seeks to reform the law to address the controversial “Fire and Rehire” practices, aiming to provide effective alternatives to avoid them.

3. Day-one rights The bill guarantees day-one rights for all workers, including parental leave, sick pay, and protection against unfair dismissal.

The Employment Rights Bill officially came into effect on 10 October 2024, introducing significant reforms to strengthen workers’ rights and address unfair employment practices.

While the bill is now law, further detail on many policies will be introduced through regulations following Royal Assent. To support this, the government plans to consult widely in 2025, seeking feedback from stakeholders on several areas of reform. Some consultations will start by the end of this year, including topics like zero-hour measures for agency workers, updates to trade union legislation, and adjustments to Statutory Sick Pay.

With most reforms expected to take effect no earlier than 2026, the government is committed to giving businesses sufficient time to prepare. Extended timelines and guidance will be provided where needed to ensure a smooth transition for organisations. Here's a recap of the bill's key points:

4. Statutory Sick Pay It plans to remove the lower earnings limit for Statutory Sick Pay, making it accessible to all workers immediately, without any waiting period.

5. Flexible working Flexible working arrangements will become the standard from the first day of employment, with employers expected to make reasonable accommodations.

6. Protection for new mothers The bill makes it unlawful to dismiss a new mother within six months of returning to work, barring specific exceptional circumstances.

7. Single enforcement body A new Fair Work Agency will be established to oversee the enforcement of workplace rights.

8. Fair pay agreement There will be a fair pay agreement introduced for the adult social care sector, with the possibility of extending this to other sectors in the future.

9. Trade union legislation The bill will update trade union legislation, lifting restrictions on trade union activities and encouraging good faith negotiations.

10. Statutory recognition It will simplify the process for workers to gain access to trade unions, ensuring easier statutory recognition.