Under UK employment law it is ILLEGAL to give a bad reference! One can refuse to give a reference, which in itself may speak volumes, but it is against the law to deliberately give a bad reference
No it isn't. An employer cannot provide a reference that is false, and if it is inaccurate, unfair and misleading, the former employee may be able to claim for quantifiable damages in court, if a loss resulted. However, there is nothing "illegal" about a bad reference if (for example) the previous employer can back up the reference with warning letters, etc.