Common sense comes into play when determining whether to give a positive or negative reference for an employee. Unfortunately as a small business owner, I have given out more negative references for my past employees. However, all the negativity comes from employees that make choices that jeopardize their current employment and future endeavors that they may be after.
I would typically give a negative reference for employees that would not show up and not call with an explanation. Employees that stole merchandise or money would not receive a decent reference. Employees that had a poor work ethic or treated other employees with disrespect also received a negative reference. Employees that could not follow company guidelines or rules were also given a negative reference.
Very rarely was there a situation where I had to contemplate whether or not I was going to give a former employee a negative reference. Every situation seems to be cut and dry and your common sense leads the way when it comes to giving a reference for a former employee. If you ever do question what type of reference to leave for an employee, put yourself in the position of the person that's asking for the reference and and ask yourself if you would really want that person working for you.