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I do not believe it is illegal, but it is risky because the former employee might sue claiming the negative reference was false.
That is why most larger or more mature companies will only say "yes, employee x worked here from date1 to date2" and say nothing, either positive or negative. At my former company where I worked for more than ten years in management, I was strictly prohibited from giving any reference about a former employee. Our HR people would simply verify employment. If a former employee was really good, I was happy to give a personal reference.
If the OP suffered from a negative reference and it is untrue - you might be able to file a compliant. But I don't know who to complain to. It seems unlikely that it will be a productive thing to do unless you have legal help.
Your question is worded oddly, so I am going to try and guess what you're actually asking. Are you meaning to ask whether it is illegal for a former employer to respond negatively to an inquiry from another company who is looking to hire a former employee of the former employer? In that case, of course its not illegal--potential employers check with past employers all the time in making hiring decisions.
Of course they can verify employment but....... is the former employer liable for defamation if they cause the former employee issues with obtaining employment based on their(former employer) negative "comments" regarding that former employee... In the past I verified employment dates but was prohibited from offering negative information regarding the reason for the ending of the employment relationship.
There isn't a clear answer to your question. It depends on what was said. It's not impossible that it could rise to that level, I'll put it that way. If I was a former employer, I would just keep my mouth shut unless I was ready and willing to back up my negative comments with some facts.
Short answer: it is not illegal for an employer to give a TRUTHFUL employment reference. If you left a job on bad terms, it is better to be honest about it in the interview so there are no surprises when the current employer calls for a reference.
if you were a bad employee buck it up and take your medicine......quit trying to blame others for your faults
the time and effort you waste on this BS witch hunt would be better spent finding a job where you can either prove you are worthy of employment or you can be fired again for not being a good employee
wasting the next 5 years of your life trying to prove something false that is probably true is a waste of your time even if you do get the big payoff you are wishing for
just go get a job and quit obsessing over your past
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