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Published on 15 October 2019

Good Work Plan: Proposals to support families – Neonatal leave and pay

While the LITRG agree that providing additional support for parents by way of statutory neonatal leave and pay is positive, it has not been made clear in this consultation what the treatment of this income will be for both income tax and benefits purposes. If neonatal leave is to be taxable, then this needs to be made clear to both employees and employers, and work must be done to establish how the payments and statutory leave period will affect entitlement to tax credits, universal credit and other work-related benefits. It is important to ensure that recipients will not be made worse off.

newborn baby lying inside the infant incubator in hospital
©shutterstock/Olesia Bilkei

The LITRG stress that consideration must also be given to small and micro employers, including accidental employers, who will have to administer any new statutory payment. It is important that any new statutory requirement is straightforward to understand and administer, and is as similar as possible to existing statutory payment regimes, so as not to cause too much confusion. We are also keen to see the introduction of a mechanism for small employers to be able to recover the cost of neonatal pay, so they don’t foot the bill for these payments.

We also highlight concerns regarding the condition of having to meet the lower earnings limit in order to receive neonatal pay, as this could cause problems for the very low-paid or those with irregular earnings, such as part-time or casual workers, as many will just not work enough hours to meet the earnings criteria.

The LITRG's response can be found here: Good Work Plan: Proposals to support families – Neonatal leave and pay – LITRG response

Sharron West


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