Payroll provider PayFit has launched a new integration with Irish-founded benefits platform Kota that will allow UK SMEs to offer private healthcare directly through payroll — responding to what both companies say is a major shift in how workers access medical support.
The move comes as private medical insurance (PMI) usage reaches a three-decade high. A record 4.7 million people in the UK are now covered through employer-sponsored schemes, reflecting growing pressure on the NHS and rising expectations for workplace wellbeing. Recent research cited by PayFit indicates that one in three working-age adults now describes private health insurance as “essential.”
A First For Payroll Platforms
The partnership makes PayFit the first dedicated payroll platform in the UK to embed private healthcare as a native feature. Through the integration, employers can enrol staff in health schemes from providers including Bupa and Vitality, manage deductions, automate tax reconciliation, and ensure compliance — all from within their existing payroll environment.
For SMEs, which make up 99.9% of UK businesses, the ability to manage health benefits without additional systems or intermediaries could prove significant. According to PayFit, HR teams in small and mid-sized firms spend up to 57% of their time on administrative tasks, making benefits management an area many companies avoid due to complexity and cost.
Firmin Zocchetto, Co-founder and CEO of PayFit, said the economic backdrop is accelerating change.
“SMEs are stepping up to support employees across their physical, mental and financial wellbeing. With HR teams already stretched, embedding healthcare into payroll removes pain points and gives employers back time to support their people instead of drowning in paperwork.”
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SMEs Seek “Big-Company” Benefits
For Kota, which is regulated by the Central Bank of Ireland and provides benefits infrastructure for employers such as Remote, Tines and Carwow, the collaboration aims to close the gap between what small companies want to provide and what they can realistically manage.
Luke Mackey, Co-founder and CEO of Kota, said complexity has been a longstanding barrier.
“Every business wants to take care of their people, but offering meaningful health benefits has often been too complex or costly. Together with PayFit, we’re giving small businesses the tools to offer big-company care, seamlessly embedded where they already work.”
The integration combines PayFit’s payroll engine with Kota’s benefits administration platform, allowing SMEs to offer healthcare in just a few clicks. It also removes the need for brokers, manual paperwork, or separate systems traditionally associated with private medical benefits.
Wellbeing As A Workforce Strategy
Demand for employer-supported healthcare comes amid rising costs linked to sickness and lost productivity — estimated at £85 billion annually. Employees also report increasing financial and mental-health strain, contributing to absenteeism and staff turnover across major industries.
As a result, workplace benefits have become an area of competitive differentiation, particularly for SMEs looking to attract or retain talent without large salary inflation.
PayFit, which achieved unicorn status in 2022, supports more than 20,000 SMEs in the UK and Europe. Kota, founded in 2023, has raised more than €20 million from investors including EQT Ventures, Frontline Ventures and Eurazeo.
A Signal of Convergence in HR Tech
The launch underscores a broader trend in HR tech: the merging of payroll, benefits, and wellbeing tools into single platforms, reducing fragmentation for both employers and employees. As adoption of PMI accelerates, PayFit and Kota position their collaboration as a way to lower the threshold for entry, particularly in a market where SMEs often struggle to match the benefit packages of larger employers.
Whether this marks a new standard for payroll providers remains to be seen, but the companies argue that the shift towards integrated wellbeing offerings is already underway and increasingly unavoidable for businesses navigating a tightening labour market and a strained public healthcare system.
