How the Oncall Pay and Compensation works today?

In this article, we navigate the intricate realm of on-call compensation, shedding light on how various companies approach this crucial aspect of software engineering. Furthermore, we’ll explore regional and company-type differences in compensation. Towards the end, we’ll discuss the process of determining the right on-call compensation strategy to strike a balance that suits both employers and employees.

1. Different Approaches to On-call Compensation

In the tech industry, on-call practices vary widely. Companies adopt diverse philosophies when it comes to on-call compensation:

• Oncall is the Sole Responsibility: Some organizations hire dedicated tech professionals, such as DevOps Engineers or Site Reliability Engineers (SREs), whose primary role is to handle on-call duties. This model is common in traditional companies and highly regulated industries, where clear expectations and staggered shifts help manage the workload. At companies following this philosophy, the on-call role is crystal clear.
• Business Hours Only: Many companies don’t expect engineers to be on-call outside of regular business hours. This is prevalent among local businesses, startups, and consulting firms, where downtime outside of core hours is less critical. In such cases, on-call responsibilities align with typical business hours. Compensation practices may vary, but it often falls within market standards.
• Limited Expectations Outside Business Hours: Some companies maintain an on-call person who may reach out to software engineers during outages, but engineers aren’t obliged to respond immediately. This approach is typical in small businesses and startups, where on-call remains relatively informal.
• Regulated Compensation: In regions with on-call regulations, companies structure their compensation accordingly, adhering to local rules. However, some companies with satellite offices or unique circumstances might unintentionally violate local regulations. Regulation plays a pivotal role in determining on-call compensation in specific regions. Smaller tech companies may also sidestep overly rigid regulations, opting to compensate in line with the spirit rather than the letter of the law. Compensation under regulated conditions can vary widely based on regional laws and company size.
• Incorporated into the role, compensated with pay and time off: Empathetic companies recognize the disruption on-call duties bring and offer compensation, time off, or a combination. These companies acknowledge that being on-call represents an additional burden that requires compensation, even in the absence of local regulations mandating it.
• Voluntary Oncall with Generous Compensation: Some companies encourage voluntary on-call by providing substantial compensation. This approach is particularly effective when dedicated on-call personnel exist. Companies that struggle to find enough volunteers often offer generous compensation to entice participation. Dedicated on-call personnel, such as DevOps engineers or SREs, may exist in these settings, helping manage on-call responsibilities effectively. To entice engineers to voluntarily take on-call duties, companies may offer substantial compensation.
• Oncall as Part of the Job: In contrast, many companies, especially those paying top-tier salaries, consider on-call duties as part of the job and don’t provide additional compensation. Some companies, including several tech giants, follow the philosophy that on-call responsibilities are inherent to the job and, therefore, do not warrant additional compensation. This approach is common among companies that offer competitive salaries, often at the top end of the compensation spectrum.

While we’ve discussed seven distinct perspectives, in essence, on-call approaches can be categorized into two fundamental paradigms i.e. on-call for software engineers is additional and on-call is part of the job.

2. Compensation Comparisons

The question of whether or not to compensate for on-call duties is a pivotal one for both employers and employees. Let’s dive deeper into the practices of these two categories:

Paying for On-Call Responsibilities:

• Generous Compensation: Some companies understand the value of their employees’ time and commitment to on-call duties. Companies like Google, Microsoft (UK), and Netflix are known for their generous compensation for being on-call. Compensation rates can vary significantly, depending on factors like company size, location, and the criticality of the systems supported.
• Various Compensation Models: These companies typically offer a variety of compensation models. This might include a flat rate per week for being on-call, an additional flat rate for being on standby during off-hours, and extra pay for incidents that require engineers to work outside of core hours. Examples include PayPal (global) and Amazon (UK: Prime Video).
• Legal Compliance: Companies in regions with strict on-call regulations ensure that their compensation practices align with local laws. They understand that non-compliance can lead to legal issues and, therefore, prioritize adherence to these regulations. For instance, Salesforce (Germany, India) and SAP’s Emarsys (part of SAP) adhere to local regulations.
• Competitive Edge: Offering competitive on-call compensation can give these companies an edge in attracting and retaining top talent. Engineers often seek positions where their extra efforts are recognized and compensated fairly. Notable examples include Atlassian (global, incl US) and Spotify (global).

Non Paying for On-Call Responsibilities:

• Tech Giants and Top-Tier Salary Companies: Many well-established tech giants and companies that already offer top-tier salaries often fall into this category. They follow the philosophy that on-call responsibilities are inherent to the job and, therefore, do not warrant additional compensation. Examples include Apple, Amazon (in most regions), and Microsoft (US).
• Attracting Talent Through Other Means: These companies may attract talent through other means, such as offering exceptional base salaries, comprehensive benefits packages, and opportunities for career growth. Their compensation packages are designed to be highly competitive even without additional on-call pay. Companies like Airbnb, Dropbox, and LinkedIn adopt this approach.
• Regions with Legal Mandates: In some regions, companies may not pay for on-call duties, primarily because local regulations do not mandate it. Instead, they focus on ensuring that their base compensation and benefits are attractive to employees. Examples include American Express and Oracle.
• Differentiated Work Cultures: These companies often emphasize a culture of excellence, where engineers are expected to take pride in their work and demonstrate a high level of commitment. While they may not provide additional compensation for on-call, they create a work environment that appeals to those who thrive in challenging roles. For instance, Box, GitHub, and Nike adopt this approach.

In conclusion, whether a company pays for on-call duties or not depends on a range of factors, including its size, industry, location, and cultural values. Engineers and job seekers should consider these factors when evaluating potential employers, as the compensation philosophy can significantly impact one’s overall job satisfaction and work-life balance. Ultimately, it’s important to find a company whose approach to on-call aligns with your personal values and expectations.

3. Compensation practices differs by Region

Compensation for oncall duties exhibits substantial diversity across regions, influenced by local regulations, market forces, and corporate policies. Below, we explore the world of oncall compensation on a global scale, offering insights and concrete examples.

• United States: In the U.S., oncall compensation is less common, but some exceptions exist. Notably, companies like Google, Intercom, Spotify, LaunchDarkly, CircleCI, and PayPal stand out, compensating at or above 1,000 USD per week for on-call responsibilities. They emphasize recognizing the value of their employees’ time and commitment to on-call duties. Importantly, they extend this practice globally, ensuring consistent compensation for engineers across the world.
• United Kingdom: Unlike the United States, the UK often sees companies paying engineers for oncall responsibilities, even though there’s no legal mandate. The UK demonstrates a propensity for compensating on-call duties, often paying between 600–1,000 USD per week. Companies like Zendesk and HelloFresh in the UK prioritize recognizing the additional burden of on-call and accordingly offer compensation.
• Germany: Germany also values compensating for on-call duties, aligning with neighboring regions in Europe. Major companies like Zolando and SumUp in Germany offer compensation in the range of 600–1,000 USD per week for on-call roles.
• Australia: In Australia, companies like Atlassian and SEEK adopt a compensatory approach, offering between 400–600 USD per week for on-call responsibilities. This signifies a global trend where compensation is provided for the added burden of being on call.
• Brazil and Spain: These countries enforce strict regulations regarding oncall compensation, making it obligatory for companies with local operations to provide compensation of at least $500 USD per week to engineers oncall for most companies.
• India: India presents a mixed landscape for oncall compensation. While there are no strict regulations mandating it, many tech companies, particularly multinational corporations and well-funded startups, choose to compensate their engineers for oncall duties. Compensation in India varies, with some companies offering between $300 to $400 USD per week, while others may provide more generous packages.

4. Compensation differs by type of Company

The compensation for oncall duties can vary significantly based on the type of company an engineer works for. Factors such as the company’s size, industry, and financial status often play a crucial role in determining how much they are willing to compensate their employees for oncall responsibilities. Below, we’ll explore how compensation can differ based on the type of company:

• Global Tech Giants (e.g., Google, Facebook) provides competitive Compensation: Leading industry giants like Google and Facebook are renowned for their competitive compensation packages. Engineers at these companies often receive generous compensation for on-call duties, typically ranging from $600 to $1,000 USD per week or even higher, placing them at the higher end of the pay scale.
• Well-Funded Startups provides competitive Packages: Startups with substantial funding rounds are usually well-positioned to offer competitive compensation, including for on-call responsibilities. Engineers working at such startups can expect compensation in the range of $400 to $800 USD per week.
• Mid-Sized Tech Companies provides varied Compensation: Mid-sized tech companies, which fall between startups and large enterprises in terms of size, exhibit varying compensation practices for on-call work. Engineers might receive compensation ranging from $300 to $600 USD per week.
• Traditional Enterprises (e.g., Banks, Healthcare) with budget Constraints: Companies in traditional industries, like banking and healthcare, often operate with stricter budget constraints. Consequently, compensation for on-call duties tends to be on the lower end, typically ranging from $200 to $400 USD per week.
• Company Culture and Commitment to Employee Well-Being: Some companies prioritize their employees’ well-being and work-life balance. As a result, they may offer higher compensation to acknowledge the additional demands placed on engineers who are on call.

Additionally, compensation for oncall work can depend on an engineer’s specific role, experience level, and negotiation skills. Prospective employees should research and consider a company’s compensation philosophy when evaluating job offers to ensure it aligns with their expectations and financial needs.

5. Deciding Your Oncall Strategy Compensation: Finding the Right Balance

In the ever-evolving landscape of on-call practices in the tech industry, it’s crucial for both engineers and companies to find the right balance when it comes to on-call compensation. Here are key considerations to help you determine the most suitable approach:

• Evaluate Industry Standards: Research industry standards and understand how peer companies in your sector compensate for on-call work. This can provide valuable insights into what’s considered competitive in terms of compensation.
• Factor in Local Regulations: Be aware of regional laws and regulations governing on-call pay. Ensure that your compensation strategy complies with these legal requirements, as non-compliance can lead to legal issues.
• Assess the Impact of Oncall: Consider how on-call responsibilities impact your personal life, well-being, and overall job satisfaction. Evaluate the disruption it causes and assess how compensation, whether in the form of cash or time off, can address these challenges.
• Prioritize Employee Well-Being: Companies should prioritize the well-being of their software engineers. Recognize that on-call work can lead to burnout and attrition if not adequately compensated or managed. Offering time off or other benefits can mitigate these risks.
• Tailor Compensation to Company Culture: Align your compensation strategy with your company’s culture and values. If your organization values work-life balance and employee satisfaction, consider more generous compensation for on-call work.
• Engage in Open Dialogue: Foster open communication between engineers and management regarding on-call compensation. Encourage engineers to share their feedback and preferences, and be willing to adapt your compensation strategy accordingly.
• Consider the Criticality of Systems: The importance of the systems being supported during on-call can influence compensation decisions. Critical systems may warrant higher compensation due to the increased responsibility and pressure.
• Negotiate Individual Packages: For engineers, don’t hesitate to negotiate your compensation package based on your unique circumstances and the specific on-call requirements of your role. Be prepared to discuss not only cash compensation but also time-off benefits.
• Regularly Review and Adjust: Keep your on-call compensation strategy under review. As circumstances change, such as company growth, regulations, or employee feedback, be prepared to adjust your approach to ensure it remains fair and competitive.

Reduce Your Oncall Operations

Utilise Apps like Pagerly to ease up Oncall Operations such as :

• Automatic Oncall Reports
• Automatic Creating Post-Mortem Timeline
• Reduce MTTR
• Managing Oncall Rotation and Schedule on Slack

Takeaways

In summary, the tech industry exhibits a wide range of approaches to on-call compensation, spanning from viewing it as an integral job component to offering substantial rewards to engineers. Gaining insight into a company’s on-call culture holds significant importance for both employers and employees.

We trust that this article has illuminated the intricate terrain of on-call compensation within the tech industry. Your personal experience with on-call duties can significantly hinge on these varied practices.

Ref :

• ‍Incident management for high-velocity teams‍
• Oncall Compensation for Software Engineers