1. loyalty/integrity of an employee
2. His words v/s reality
3. If he hides any information then this could be come out of verification.
4. Any Positive / negative remark of previous employer may out to strengthen the Findings.
There is no legal sancity as specified by Mr. Prashant Ingawale. But, depending on severity of the work and profile you must go for it. Employee verification includes : Previous employment verification, Education Verification, Background Verification (Police / Court ) etc. This may be really helpful to understand the background against what he quoted in the resume or at the time of interview.
Also, in today's digitally equipped world it is very important to understand and identify the genuine documents which are produced by the shortlisted candidate / employee.
However, most companies provide for it in their appointment / offer letter.
Further, many also take an authorisation from the employees for the background check. I have in the past been sent such authorisation since we refuse to give any information without such an approval