Well, at least in reference letters, former employees can be criticised quite well. Mostly by omitting certain words. I believe most employers have practice in reading between the lines.
edit: I always thought this is just culturally. I have no idea, but I don't believe there are any laws that forbid telling the truth about former employees.
edit: I always thought this is just culturally. I have no idea, but I don't believe there are any laws that forbid telling the truth about former employees.