How To Ask A Contractual employee to leave the company .

Dear all,
Im in a Fix currently . I have to ask an employee to leave as he is on a contract and he is 59 years . however My subordinate did not sign a contract agreement with him . but verbally it was agreed , he is suppose to be on a yearly contract and it should end in September .Now that subordinate left the job few months ago , Now i cant find a way out .
please help me to get out of the sticky situation where i can ask him to leave without the need of this contract . As my management wants me to down size . and his name is there .

As per the Terms of Contract, by referring to Termination clause, inform Employee concerned by paying him Notice period Salary.You are giving lame excuse that your Subordinate had not signed the Contract Agreement with Contract Employee concerned, which you have realized now. As Superior Officer, you have to own Moral responsibility for this costly lapse.Without dithering Pay Notice Period Salary.As per your information you have engaged Retired Employee on Contract basis

Who purchases stamp paper for entering into agreement with labour contractors. is it the responsibility of employer or labour contractor.
Please suggest.