You don't 'give' an employee a contract - a contract will exist, whether you like it or not, as soon as someone accepts your job offer.
You are, however (with one exception, set out in question nine) legally required to give every employee a written statement covering specified terms and conditions, within two months of the employment beginning. If you fail to provide such a statement, the employee may (at present) refer the matter to an Employment Tribunal to decide what terms and conditions he (or she) is working under.
The penalty for non-compliance (ie failure to provide a written statement) is either two or four weeks' pay (capped at the normal maximum, currently £330 per week), unless 'there are exceptional circumstances which would make an award or increase unjust or inequitable'. This is not, however, a free-standing right to compensation. It is an increase in compensation if, and only if, a Tribunal finds in favour of the employee under another type of claim, eg unfair dismissal or underpayment of wages.
The contract should be checked to ensure that it is relevant to the employee: otherwise there is a risk that an Employment Tribunal will infer terms and conditions, if a dispute should arise. In one case, for instance, the Employment Appeals Tribunal (EAT) backed an Employment Tribunal finding that an orthodontic specialist was entitled to consider herself employed by the Ministry of Defence (MoD), and therefore entitled to sue for unfair dismissal, even though the standard contract she signed with the MoD in some respects indicated that she was self-employed.
The EAT said that the Tribunal was entitled to 'look outside the four corners of the contract' because it was apparent that the contract was not intended in this case to be the exclusive record of the terms of their agreement.
