Manually calculate Statutory Neonatal Care Pay

Before you begin

You need the following information to work out your employee’s Statutory Neonatal care Pay:

• the declaration completed by your employee, or your own version if you have one
• the child’s date of birth (for multiple births, each child’s date of birth)
• the date the child started receiving neonatal care (for multiple births, the date that each child started receiving neonatal care)
• the date the child stopped receiving neonatal care (for multiple births, the date that each child stopped receiving neonatal care)
• the date they want to start their Statutory Neonatal Care Pay, and how many weeks of pay they want to claim
• their gross earnings and the dates you paid them
• the date that they started working for you

You also need to check if your employee’s gross earnings:

• are liable to employer’s Class 1 National Insurance contributions
• would be liable if they earned enough, or were old enough to pay Class 1 National Insurance contributions

How to calculate average weekly earnings

Average weekly earnings must include all gross earnings on which Class 1 National Insurance contributions:

• are due
• would be due (if the employee’s earnings were high enough, or they were old enough to pay them)

Your employee’s entitlement to Statutory Neonatal Care Pay depends on their average weekly earnings in the relevant period.

The relevant period is usually the 8-week period before the relevant week.

The start of the relevant period is the day after the last normal payday, falling at least 8 weeks before the end of the relevant period.

The end of the relevant period is the last normal payday on, or before the Saturday of the relevant week.

Their average weekly earnings in the relevant period cannot be less than the lower earnings limit.

Find the lower earnings limit (LEL) for Class 1 National Insurance contributions for the relevant tax year.

Monthly-paid employees

To calculate your employee’s average weekly earnings:

• add up all their gross earnings in the relevant period
• divide all their gross earnings by the number of calendar months in the relevant period
• multiply the figure by 12 (number of months in the year)
• then divide the figure by 52 (number of weeks in the year)

Employees not paid monthly

To calculate your employee’s average weekly earnings:

• add up all their gross earnings in the relevant period
• divide all their gross earnings by the number of days in the relevant period
• then multiply the figure by 7 (days in a week)

Paid weekly without full weeks

You might bring forward your employee’s normal payday because of bank holidays (such as Easter or Christmas).

To calculate your employee’s average weekly earnings:

• add up all their gross earnings
• divide all their gross earnings by the number of weeks that they were actually paid, not the number of weeks in the relevant period

Paid multiples of a week

To calculate your employee’s average weekly earnings:

• add up all their gross earnings in the relevant period
• divide all their gross earnings by the number of whole weeks in the relevant period

Paid monthly without full months

First, work out the number of rounded months as follows:

• count the number of whole months
• count the numbers of odd days

Then, round up or down as follows:

• for any month except February — 15 days or less round down, 16 days or more round up
• for February — 14 days or less round down, 15 days or more round up

To calculate your employee’s average weekly earnings:

• add up all their gross earnings in the relevant period
• divide all their gross earnings by the number of rounded months in the relevant period

Not paid a regular pay pattern

To calculate your employee’s average weekly earnings:

• add up all their gross earnings in the relevant period
• divide all their gross earnings by the number of days in the relevant period
• then multiply the figure by 7 (days in a week)

Mistimed pay

This applies if your employee is contractually paid on the same date, but you pay them earlier or later than their contractual payday because it might fall on a weekend or a bank holiday.

To calculate your employees average weekly earnings:

• add up all their gross earnings in the relevant period
• divide all their gross earnings by the number of weeks’ wages that they were actually paid

Do not use this calculation if your employee has been underpaid due to a payroll error.

Underpayments or overpayments of earnings

Only use all the gross earnings paid to your employee within the relevant period to calculate their average weekly earnings.

If there’s an over or underpayment of earnings within the relevant period, include the amount in their average weekly earnings calculation to check if they’re entitled to Statutory Neonatal Care Pay.

Salary sacrifice

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

Do not include the value of the salary sacrifice.

Contractual benefits

Your calculation for Statutory Neonatal Care Pay should only be based on earnings which are subject to Class 1 National Insurance contributions.

Do not include any benefits which are exempt from Class 1 National Insurance contributions.

Earnings affected by a backdated pay rise

If your employee receives a backdated pay rise which increases the amount of earnings already paid in the relevant period, you need to recalculate their average weekly earnings to include this amount.

You should do this if the employee was either:

• not entitled to Statutory Neonatal Care Pay
• entitled to Statutory Neonatal Care Pay at less than the standard rate

Find the standard rate for Class 1 National Insurance contributions for the relevant tax year.

You must recalculate their average weekly earnings to check if they’re:

• now entitled (and pay any Statutory Neonatal Care Pay due)
• entitled to an increase (and pay any extra Statutory Neonatal Care Pay due)

How to calculate Statutory Neonatal Care Pay

When you have worked out your employee’s average weekly earnings, you can then work out how much Statutory Neonatal Care Pay is due, and when.

If you’re employee is eligible, they can decide when and how to take their entitlement of Neonatal Care Leave.

If they have given notice that they want to take Statutory Neonatal Care Pay and Leave, and completed the declaration, you will pay your employee during the Statutory Neonatal Care Pay period that:

• starts on the date for which the employee has given notice and completed a declaration
• lasts for every week that they receive Statutory Neonatal Care Pay

Align your employee’s Statutory Neonatal Care Pay with their normal pay period

You can pay Statutory Neonatal Care Pay in part weeks to help you align the payments to your employee’s normal pay period.

To align the payments:

• divide their weekly Statutory Neonatal Care Pay rate by 7 (days in a week)
• then multiply the figure by the number of days for which Statutory Neonatal Care Pay is due in the week or month

For example, if your employee’s normal pay period covers 2 days in one month, and 5 days in the beginning of the next month (2 days in April and 5 days in May), to align the Statutory Neonatal Care Pay with their normal pay period:

• pay them two sevenths in April
• pay them five sevenths in May

You cannot pay your employee’s Statutory Neonatal Care Pay for part of the week.

If your employee is taking Statutory Neonatal Care Leave when their baby is still in neonatal care, including during the week afterwards (Tier 1 period), but it’s interrupted mid-week by another pre-booked leave (such as Paternity or Shared Parental Leave), they can stop their Neonatal Care Leave mid-week, but you must pay them Statutory Neonatal Care Pay for the full week.

Help and advice

Contact general enquiries for employers if you need more help or advice.