Standby pay: Overview, definition, and example
What is standby pay?
Standby pay refers to compensation given to employees who are required to be available for work outside of their regular working hours but are not actively working. This type of pay applies when an employee must be on-call or ready to respond if needed, such as during emergencies or critical business operations.
For example, a maintenance technician for a utility company might receive standby pay for being on-call during weekends in case urgent repairs are needed. Even if they are not called in, they are compensated for their availability.
Why is standby pay important?
Standby pay ensures employees are fairly compensated for making themselves available outside of normal working hours. It recognizes the inconvenience of being on-call and incentivizes employees to be ready for urgent work needs.
For businesses, offering standby pay helps ensure critical operations can continue without delay. It is especially important in industries such as healthcare, utilities, emergency services, and IT support, where immediate response to issues is necessary.
Understanding standby pay through an example
Imagine an IT company requires a senior technician to be available on weekends in case of system failures. The technician receives standby pay for remaining on-call, even if no issues arise. If they are called in to resolve a problem, they receive additional compensation for their time worked.
In another case, a hospital requires anesthesiologists to be on standby for emergency surgeries during nighttime hours. Even if they are not called in, they receive a standby pay rate for being available. If they are needed, they receive their standard hourly rate or overtime pay.
An example of a standby pay clause
Here’s how a standby pay clause might appear in an employment agreement:
“Employees required to be on standby outside of regular working hours shall receive standby pay at a rate of [specified amount] per hour. If the Employee is called in to work while on standby, they shall be compensated at their standard hourly rate or overtime rate, as applicable.”
Conclusion
Standby pay ensures employees are fairly compensated for being available outside of normal work hours, even if they are not actively working. It provides businesses with a reliable way to manage urgent situations while recognizing employees’ time and commitment.
By including a clear standby pay policy in employment agreements, businesses can establish fair expectations, improve employee satisfaction, and ensure continuity in critical operations.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.