Vehicle-track interaction in railway operation is highly influenced by physical processes within the wheel-rail contact. Thus, accurate prediction models describing these processes are of high importance. Such models have to take into account the plasticity phenomena appropriately because such phenomena generally occur in the near-surface layers of wheels and rails in railway operation. Within the contact zone, two plasticity effects occur: 'global' plastification in the order of hundreds of microns up to millimetres due to the general loading situation and 'tribological' plastification in the order of microns due to surface effects (e.g. roughness) which is always accompanied by the wear process. State-of-theart models do not take into account these effects sufficiently. The main ideas of the so-called overall wheel-rail contact and damage model taking into account the mentioned plasticity phenomena are presented together with typical results of the model.