At my present place of employment, we are not permitted to give any kind of employment references, positive nor negative.

I3ANAL, but couldn't that be construed as a policy that could hurt former employees' careers, and thereby open the company up to lawsuits of a different sort?

I'm not sure I'd want to work for a company that I knew would be unwilling to act as a reference during my next job search. It seems like a career-limiting move to work at a place where the employer will be unwilling to even confirm that you worked there. :P

Dick move I agree. But isn't like a company has to help you get a job elsewhere.

Also not a lawyer, but I've talked with lawyers about it more than once.

The legal advice I was given was for HR to only validate the employment dates.

People are allowed to ask for recommendations, but generally those should be refused. In cases where they are needed (such as someone going to graduate school and being required to have character references) they need to be carefully worded to avoid discriminatory language and include only verifiable statements or use positive opinion statements. If they cannot be positive they should not be issued.

IANAL: In the US, doesn't it come under defamation and slander? Admittedly tough to prove but worth talking to an employment solicitor lawyer.

That is one of many areas it could fall under. I imagine it also falls under various employment laws.

In the US, truth is an absolute defense against defamation laws. It does not matter if the statement is disparaging if the person can demonstrate its truth.

In many countries (such as the UK and Australia) this is not the case. A statement that is true but comes with negative connotations may still fall under defamation laws if there are problems like being denied a job.

There may also be problems if you say something positive that isn't true. Let's say the employer is considering firing or laying off someone and they come in asking for a reference for a different job. An employer may be tempted to issue a glowing reference to help the worker become somebody else's problem. This can also come back to bite you.

Either way, the safest answer is to say nothing at all, which is why it is the common recommendation. Confirm that they were employed for those dates, nothing more.

In many countries (such as the UK and Australia) this is not the case. A statement that is true but comes with negative connotations may still fall under defamation laws if there are problems like being denied a job.

That's not strictly true for the UK, at least not since 2013; the burden of proving truth does fall on the defendant, which can make defending against slander and libel time-consuming or costly, but if you can show that the claim was 'substantially true', you're in the clear.
(Source: http://www.legislation.gov.uk/ukpga/2013/26/pdfs/ukpga_20130026_en.pdf Section 2(1).)

In fact, even just being able to prove that the statement was clearly an opinion and was honestly held can be a defence (see section 3).

In my experience, UK employers tend to give out a positive but generally non-committal reference to anybody that asks. Sometimes a full endorsement with some detail, but not all the time. Most new jobs ask for references so it would be difficult if they weren't given out regularly.