An employee threatens to quit if she doesn’t get a raise. She is angry about how compensation happens. She whines about it to other employees.
Employees cannot run the business. Discord in the work force grows. Move her out and promote your best to her position.
If you are asked for a recommendation, say only moderately good things that won’t leave you open to a lawsuit. Answer the “would you rehire” question with comments about her abilities.
Hmmm, I think you are mischaracterizes what happened. The manager was the one whining, and gaslighting. It says nothing about the letter writer going to other employees.
Employees cannot run the business.
No, but what you are advocating kind of sounds like communism. Companies that won't pay for performance will be left in the dust. You can't be forced to work for one company all your life. You are talking about the new DEI companies. You aren't allowed to ask for a raise, because that would be unfair to some women. If a company doesn't believe in competition, they can expect failure.