It's not legal to give a sh1tty reference.
Sorry to be a stickler, but that's not quite correct. There is nothing illegal about giving a 'sh1tty' reference in itself. The reason employers don't is because it opens the door to being sued for defamation if the reference turns out to be untrue. If they want to write a bad reference and are confident they could defend it in court, they are not prevented from doing so in law. Most won't take the risk though...
(I've learnt a
lot about aviation from this site, so I have to give something back where I can.
)