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1. There is no risk of a penalty in letting go an employee on a probationary period, because, until the probationary period is over, the employee does not have full employment rights. Essentially, the fact of the probationary period allows you to terminate the employment relationship should you deem this necessary, without there being any comeback for the employee. So, there is no risk of a penalty if you get rid of an employee on a probationary period. Be aware additionally, that all employees, including probationary employees, have a right to a copy of their employment contract. So, if there is no written employment contract, you should prepare one, in case the employee requests a copy of it, because you are under an obligation to provide one, should one be requested.
2. If you require any further clarification of the answer or if there is any other issue arising from your question, I am happy to provide further information to resolve your difficulties.
3. A contract does not need to be signed to evidence the terms and conditions applicable to the employee. Essentially, it can have been agreed by the taking up of employment. So, you should give this contract to the employee.