SNCP: Special Circumstances and Business Changes

# SNCP: Special Circumstances and Business Changes

Statutory Neonatal Care Pay (SNCP) entitlement can be affected by various changes to an employee's circumstances or your business structure. Understanding how business takeovers, redundancies, pay adjustments, and personal situations affect SNCP helps you meet your legal obligations and ensures eligible employees receive the support they're entitled to.

Business takeovers and transfers

When you take over a business, your new employees may retain their SNCP entitlement if their continuous employment isn't broken. This typically happens under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which apply when you acquire all or part of an existing business or take over a service provision like a cleaning contract.

The previous employer must provide you with employee liability information about anyone transferring to your business.

Continuous employment can also continue in specific situations even without TUPE, including when:

• A teacher moves between schools maintained by the same local education authority
• One corporate body takes over from another under an Act of Parliament
• An employer dies and their personal representative or trustees retain the employee
• There's a change in partners, personal representatives or trustees
• The employee moves between associated employers

If continuous employment continues and your new employee worked for the previous employer during the 26 weeks up to the end of the relevant week, they may qualify for SNCP while working for you.

If continuous employment is broken:

• After the baby starts receiving neonatal care — the previous employer must pay SNCP
• Before the baby starts receiving neonatal care — the employee cannot get SNCP from either the previous employer or you

Once an employee has worked continuously for you for at least 26 weeks up to the end of the relevant week, check their eligibility afresh.

If your business stops trading

You must continue paying any outstanding SNCP until either your employee receives their full entitlement or their entitlement ends for another reason. This obligation doesn't disappear simply because you've ceased operations.

Business insolvency

If your business becomes insolvent during the SNCP period (each week the employee is on Statutory Neonatal Care Leave, up to a maximum of 12 weeks), you must inform HMRC.

An administrator, liquidator, or insolvency practitioner can notify HMRC on your behalf. HMRC will then pay the employee the SNCP due to them directly. Employees can contact the HMRC Statutory Payment Dispute Team for information about their payments.

Making employees redundant

If you make an employee redundant after they've already met the eligibility criteria for SNCP, you must continue paying any outstanding SNCP they're entitled to. Redundancy doesn't cancel this statutory obligation.

Backdated pay rises

A backdated pay rise that increases gross earnings in the relevant period can affect SNCP entitlement and amounts.

If your employee is already entitled to SNCP:

• Recalculate their average weekly earnings using the new gross earnings
• Pay any additional SNCP due

If your employee wasn't entitled to SNCP:

• Recalculate their average weekly earnings using the new gross earnings
• Check if they now meet the eligibility criteria
• Pay any SNCP due

Pay errors: underpayments and overpayments

Corrections to earnings affect average weekly earnings and therefore SNCP entitlement.

For existing employees:

• Overpayments may mean they received too much SNCP (recoverable through payroll)
• Underpayments mean they haven't received the correct SNCP amount

For new employees:

Check if there's documentary evidence agreeing the SNCP amount based on average weekly earnings. Use this agreed amount to calculate their entitlement. Without documentary evidence, use their actual gross earnings.

PAYE Settlement Agreements

If an employee wasn't eligible for SNCP because their average weekly earnings fell below the lower earnings limit for 2025/26, you must:

• Add up any expenses or benefits included in the PAYE Settlement Agreement received in the relevant period
• Include this total in their gross earnings
• Recalculate their average weekly earnings to check eligibility

Salary sacrifice arrangements

Use the actual amount of gross earnings paid during the relevant period to work out average weekly earnings, not the pre-sacrifice amount.

Important: SNCP itself cannot be sacrificed and must be paid in full.

Non-cash benefits

If you pay some of your employee's earnings as non-cash benefits (such as board and lodgings, goods, or services), you cannot deduct the monetary value of these benefits from their SNCP entitlement. SNCP must be paid in full as cash.

Multiple births

An employee is entitled to a maximum of 12 weeks of SNCP, even if more than one baby needs neonatal care.

If babies need care at the same time:

The employee can only build up entitlement for one baby.

If babies need care at separate times:

The employee can build up entitlement for each baby separately, provided each receives at least 7 full continuous days of neonatal care.

Entitlement must be used within 68 weeks from the birth of the babies (or from the first baby's birth if they have different birth dates).

Surrogacy and parental orders

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

If they don't apply or the order isn't approved, they're still entitled to SNCP if:

• The baby receives neonatal care within 28 days of birth for at least 7 full continuous days
• They've already built up their SNCP entitlement

They must take this entitlement within 68 weeks of the baby's birth.

Adoption disruption

If an adoption is disrupted (for example, the baby is returned to local authority care), the adopting parent keeps their SNCP entitlement if:

• The baby received neonatal care within 28 days of birth for at least 7 full continuous days
• They'd already built up their entitlement

They must use it within 68 weeks of the baby's birth.

If the baby dies

The employee retains their SNCP entitlement if:

• The baby received neonatal care within 28 days of birth for at least 7 full continuous days
• They'd already built up their entitlement

They must take it within 68 weeks of the baby's birth. They may also be eligible for Statutory Parental Bereavement Pay and Leave.

Employee not returning to work

If an employee tells you they won't return to work after taking SNCP, you must still pay their full SNCP entitlement. You cannot ask them to repay any of it.

Employee leaves before taking SNCP

An employee isn't entitled to SNCP if they leave your employment the week before the SNCP period (or earlier) and they weren't continuously employed by you from the end of the relevant week.

Armed forces reservists

If an employee returns to work within 6 months of serving in the armed forces, they may qualify for SNCP even if they didn't work for you during the continuous employment period.

Calculate their continuous employment by adding together:

• How long they worked for you before serving
• How long they work for you after serving

Don't include the time spent serving.

Reinstatement after dismissal

If you dismissed an employee during the continuous employment period who would otherwise have met the eligibility criteria, you must pay their full SNCP entitlement if you reinstate them following:

• An employment tribunal decision that they were unfairly dismissed
• A formal grievance procedure outcome

Sources

• Business changes that affect payment of Statutory Neonatal Care Pay
• Employee circumstances that affect payment of Statutory Neonatal Care Pay

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.