Here in the UK, while it's not actually illegal to give someone a bad reference, no employer does because an inaccurate reference is grounds for legal action. You have to be able to provide evidence for everything you say. Consequently lots of employers only provide the dates you worked from and to and what your final salary was.

The fallout from someone not getting hired because the "honest downsides" were a bit too honest (or not honest enough) would not be pretty.