# Contracts

A contract is what makes an employee **payable**. It carries the wage, the effective dates, and the
department context payroll uses when a run happens — separately from the employee's directory record.

<div class="bon-video">
<iframe src="https://www.youtube-nocookie.com/embed/aILqFQYJMCI" title="Give an employee a salary: contracts" width="560" height="315" frameborder="0" loading="lazy" allow="accelerometer; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
<p><a href="https://www.youtube.com/watch?v=aILqFQYJMCI">Give an employee a salary: contracts</a></p>
</div>

## Before you begin

The employee must already exist in the directory (see
[Adding an employee](https://docs.blueonehr.com/books/employees/page/adding-an-employee)). You will need their wage and the date the contract
starts.

## Steps

1. Go to **Payroll → Configuration → Contract**.
2. Select **New Contract**.
3. Choose the **employee**.
4. Set the **start date**, and an **end date** if the contract is fixed-term. Leave the end date open
   for an ongoing contract.
5. Enter the **wage**.
6. Save. A new contract is created in **Draft** status.
7. When the contract is correct and ready to be used for payroll, change its status to **Active**.

## What happens next

Only **Active** contracts are picked up when payroll runs. A **Draft** contract exists in the system
but contributes nothing to a payroll run, which is why a newly added employee often needs this step
before their first payslip.

## The contract list

Each row shows the employee, department, start and end dates, wage and status, with **Edit** and
**Delete** actions. Statuses seen in practice: **Draft**, **Active**, **Expired**, **Terminated**.

![The Contract list under Payroll → Configuration, showing employees in Draft and Active status with their wage and start date](https://docs.blueonehr.com/uploads/images/gallery/2026-10/JqHpayroll-contracts-contract-list.png)

## Related setup

How the wage itself is built up lives alongside Contract under **Payroll → Configuration**:
[Pay Grades](https://docs.blueonehr.com/books/payroll/page/pay-grades), [Pay Components](https://docs.blueonehr.com/books/payroll/page/pay-components),
[Salary Templates](https://docs.blueonehr.com/books/payroll/page/salary-templates), and [Compensation Policies](https://docs.blueonehr.com/books/payroll/page/compensation-policies).
This guide covers the contract record itself; which of those your organisation actually uses is
configuration-specific, so check the linked pages rather than assuming a particular setup.

## Troubleshooting

**An employee did not appear in a payroll run.** Check their contract status first — see
[How payroll works](https://docs.blueonehr.com/books/payroll/page/how-payroll-works). A Draft or Expired contract is the most common cause.

## Related

- [How payroll works](https://docs.blueonehr.com/books/payroll/page/how-payroll-works)
- [Running payroll](https://docs.blueonehr.com/books/payroll/page/running-payroll)