[sokoloff]

This works. We did this for developer on-call rotations (which was also a development opportunity for rising engineers). We also did this when I ran Ops.

It's not perfectly fair in the micro sense, but it's fair enough to not trip most people's frustration meter and it's very easy to administer.

[joncrocks]

The way it used to work in the organisation I used to be part of (generally a good bunch) was that there was a flat-rate, plus an extra payment if we were required to do something.

Occasionally there was time in lieu given as well, if we were actually called and it was overnight/took a while.

Worked well, but as a general rule we were delivering a quality product, had good guys working for us and so we all felt responsible if something went wrong out of hours and would look at what happened and how we would prevent it going forward.

[sokoloff]

We also gave comp time for significant disruptions/outages, but that was mostly recognition of the practical reality that someone who normally worked days and unexpectedly worked 1-4 AM responding to the pager was going to be useless the next day anyway.

I specifically wanted to avoid variable pay, the associated timesheets tracking and approval processes, the HR and finance/payroll integration, and any temptation (beyond normal professional responsibility) to either decrease or increase the hours spent on a problem response. I'm sure it's different for different businesses, but I judged that paying on-call bonuses for weeks on-call quarterly was low enough finance integration effort and still gave the employees a sense that they were being paid some differential for being on-call.

Your last sentence is the key outcome to strive for and as long as you have decent leadership and culture, I think that's fairly easy to achieve in a small group. I don't need to be paid "extra" to do a little extra to help my team and company.