On-call employees: Compensation policy kit

Key takeaways

• On-call employees need clear compensation policies to avoid confusion, resentment, and higher turnover.

• Eligibility and expectations should be defined upfront so employees know when they're available, how quickly they respond, and what counts as engaged versus standby time.

• Compensation models must comply with local labor laws, so consult legal counsel before rolling out any on-call pay plan.

• Pay structures that reward high alert volume instead of fewer, better-handled incidents create perverse incentives that undermine system reliability.

• Fair on-call practices protect both employees and the business because burnout leads to attrition, which in turn leads to understaffed rotations.

On-call work is a reality for IT, DevOps, engineering, and support teams. Someone has to be available when systems go down outside normal business hours, and the people filling that role deserve a compensation plan that reflects the disruption to their personal time.

This guide walks through what on-call employees should expect, how to build a fair compensation policy, and how to avoid common pitfalls — like pay structures that accidentally reward the wrong behaviors. You'll also find a policy template you can adapt for your organization.

With Jira Service Management via Service Collection, teams can build and manage on-call schedule rotations, set escalation policies, and document compensation rules — all in one place. That means your on-call pay policy lives right alongside the tools your team uses to respond to incidents.

Compensation policy template for on-call employees

What are on-call employees?

On-call employees are available to respond to incidents or urgent requests outside their regular working hours. This typically includes roles in IT operations, DevOps, site reliability engineering, customer support, and infrastructure management — though any team that handles time-sensitive issues may have on-call responsibilities.

The expectations usually come down to two things: availability and response time. During an on-call shift, an employee is expected to be reachable and ready to engage within a defined window — often between five and thirty minutes, depending on severity. Most organizations distinguish between standby time (available but not actively working) and engaged time (hands-on resolving an incident).

If your team doesn't spell out what "being on call" actually requires, you'll end up with inconsistent expectations and frustrated employees. That ambiguity also creates problems for incident management when response times vary because no one agrees on what "available" means.

What are on-call employee compensation rights?

A lot of things can go wrong if you don’t have a fair on-call compensation plan. If employees are expected to work extra hours on top of their normal jobs at a moment’s notice under the high pressure of an incident—without extra compensation—they’re likely to grow resentful and suffer from burnout. 

And if your on-call model doesn’t explicitly state when an employee is expected to be available, and your on-call compensation plan isn’t formal and communicated, you’re risking extra tension and confusion within your team. 

If you don’t have a plan that’s considered and formalized, you’re effectively asking employees to work for free. You may find that fewer employees are willing to work on call, leaving others to do more on call shifts than is fair, leading to burnout and lower retention. 

Depending on your location, there may be specific laws that will determine which on-call compensation model you can choose for your organization. Be sure to consult an attorney and investigate federal guidelines before you formalize your on-call compensation plan.

What are on-call employee compensation policies and requirements?

Every company needs fair and consistent on-call pay policies. When employees feel that they’re fairly compensated for their time, they’re less likely to experience burnout, and you’re more likely to build a healthy, sustainable work culture. 

Your company’s on-call compensation policies should be clearly spelled out and documented wherever you communicate your other policies, such as an employee handbook. The policy should be explained to employees who will have on-call duties, ideally, as part of the interview process before they join the company.

The type of plan you implement will be determined by the size of your company, the type and severity of incidents your team typically faces, and your company's culture around rewarding and recognizing employees.

When choosing an on-call pay model for your company or team, always confirm that the models you’re considering follow local labor laws and that proper documentation is provided to employees.

How to prevent perverse incentives in on-call pay

On-call pay structures can accidentally encourage the wrong behaviors if you're not careful about how they're designed. The most common example is compensating based on alert volume — paying per incident or per page. On the surface, that sounds fair. But in practice, it discourages engineers from fixing noisy systems or improving on-call because doing so would reduce their pay.

A better approach ties compensation to system reliability and response quality rather than raw alert counts. When on-call employees know their pay won't drop because they automated a recurring issue or tuned out false positives, they're motivated to actually improve the system.

Here are a few ways to identify and avoid perverse incentives in your compensation plan:

• Audit your alert-to-pay ratio: If on-call employees earn more during weeks with more incidents, your structure may be rewarding chaos over stability.

• Separate on-call pay from incident bonuses: A flat rate for being on the rotation,  plus additional compensation for actual engaged time, removes the motivation to keep alert volume high.

• Review alert fatigue patterns: Frequent, low-priority alerts are a sign that your IT incident alerting rules need work, not that your team needs more on-call pay.

Reward the right behaviors

Once you've removed the perverse incentives, actively reward the behaviors that lead to better outcomes. On-call employees who write thorough postmortems, build automation for repeat issues, or improve incident communication are doing work that benefits everyone, and the compensation model should reflect that.

Here are behaviors worth recognizing and rewarding:

• Reducing repeat alerts: When someone fixes a root cause instead of just acknowledging the page and moving on, that effort should be recognized in performance reviews or bonus structures.

• Documenting runbooks: Good runbooks save time for every engineer who comes after. Tying recognition to runbook contributions encourages knowledge sharing.

• Improving response times and resolution quality: Faster, cleaner incident resolution means less downtime. Track these metrics as part of how you evaluate on-call performance.

Enforce practical safeguards

Fair on-call pay only works if the schedule itself is sustainable. Even the best compensation plan won't prevent burnout if the same people are pulling back-to-back shifts with no recovery time.

Here are practical limits to include in your compensation policy:

• Cap consecutive on-call shifts: Set a maximum number of days an employee can be on call before rotating out. Most teams cap this at seven days, with mandatory rest periods in between.

• Limit maximum engaged hours: If someone is actively working on incidents for several hours overnight, they shouldn't be expected to start a full workday the next morning. Define a threshold that triggers compensatory time off.

• Require runbooks for repeat alerts: If the same issue is raised more than twice, it should have a documented runbook. This protects on-call employees from wasting time on problems with a known fix.

Align compensation with reliability for your on-call employees

The goal of any on-call pay policy should be fewer incidents handled better, not more incidents handled at all costs. Use incident management tools like Jira Service Management, available through Service Collection, to track on-call schedules, log incidents, and measure performance against your policy. When everything lives in one system, it's easier to spot patterns and adjust rotations before burnout sets in.

Focus on the metrics that actually reflect reliability: mean time to resolution, alert volume trends, runbook coverage, and the ratio of actionable alerts to noise. When your on-call employees see that the organization rewards those outcomes, they're more likely to invest in the proactive work that makes on-call sustainable for everyone.