Neonatal Care and Minimum wage changes - May 12th 2025

Employers need to be on top of the recently introduced statutory entitlement to neonatal care leave and pay, plus increased rates of minimum wage. Looking further ahead, the Employment Rights Bill will have serious implications once enacted.

Neonatal care

The new statutory neonatal care leave and pay entitlement applies from 6 April 2025.

Neonatal care leave applies when an employee’s baby is admitted into neonatal care up to the age of 28 days, staying for a continuous period of at least seven days. Up to twelve weeks of leave can be taken depending on the length of stay in neonatal care. Employers should be aware that this is a day-one employment right.

Neonatal care pay only applies if the employee has been employed for 26 weeks. The weekly rate is £187.18 (or, if lower, 90% of earnings).

Smaller employers can recover 108.5% of the cost, with other employers claiming 92%. Most employers will want to give time off as soon as they are aware of a neonatal care situation, but that will mean managing the seven-day requirement if the employee is not already on leave.

Minimum wage

The new minimum wage rates from 1 April 2025 have brought in substantial increases, especially for younger workers and apprentices. Employees will welcome the uplift, but many employers will struggle with the additional cost, especially those in the hospitality sector. In annual terms, the increase for full-time employees aged 21 and over is £1,400.

In addition to increasing hourly rates, employers need to be careful that minimum wage entitlement is correctly calculated. For example, payments which don’t count towards minimum pay include tips and gratuities, allowances on top of basic pay (such as working unsocial hours) and any premium element (such as working overtime or bank holidays).

Employment Rights Bill – zero-hours contracts

A zero-hours contract can be a flexible option for both employer and employee, but there are concerns that this flexibility is too often one-sided in the employer’s favour.

Under legislation included in the Employment Rights Bill, the employer will have to offer a worker a guaranteed hours contract, based on the hours worked over a reference period –expected to be twelve weeks, but could be longer.

• Workers will have to be paid for any shifts that are cancelled, moved at short notice or curtailed.
• Although the changes are not expected to be implemented until 2026 at the earliest, employers should be reviewing their employment practices and prepare well in advance.

Businesses in the hospitality sector – such as a seaside restaurant taking on temporary staff over the summer months to meet increased demand – will have particular issues. There is going to be an exception where there is a genuine temporary work need, but no details have yet been provided.

Employers who try to manipulate their employment practices to avoid the zero-hours provisions could leave themselves open to a claim, and the use of agency workers is not an answer given a recent amendment to the Bill extending the new measures to agency workers.

Employment Rights Bill – day one rights

Some employment rights are currently only available after an employee has worked for a qualifying period:

• Protection from unfair dismissal requires two years of continuous employment.
• Paternity leave is only available after 26 weeks of employment, with unpaid parental leave requiring a year.

When the Bill is implemented, such rights will be available from day one of employment. Not surprisingly, employers are concerned that in future they will be unable to easily dismiss those employees whose performance is not up to par. However, the Bill does provide for an initial probationary period during which the rules for fair dismissal will be less onerous.