Is new employer allowed to check salary with previous employer?

My work colleague revealed to me that she always lies about her salary to new employees to ensure they pay more. I said this was risky as my last employer confirmed by salary with my previous employer when they asked for a reference (they didn't ask me if it was OK). She said that was naughty of them and... show more My work colleague revealed to me that she always lies about her salary to new employees to ensure they pay more. I said this was risky as my last employer confirmed by salary with my previous employer when they asked for a reference (they didn't ask me if it was OK). She said that was naughty of them and they're not allowed to do that. Assuming she's telling the truth and presumably withholds her P45, is she correct? I can't imagine my last employer would've done it if it was illegal.
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