Employer holding employees' passports

Yes they shouldn't do that but employers often do. They do this for fear of expats running away once the employer has spent money recruiting, hiring and securing legal status for them. And from experience it has been both good and bad practice to do so.

However an employer shouldn't keep a passport as there are better ways of getting an employee who is about to run. It is also worth mentioning that even if the passport is returned and then the person runs, unless the correct stamps are in the passport it can be very hard to leave the country.

Perhaps talk with your employer ask for your property back and if they refuse ask why and if it makes sense ask for a receipt which means they have to be legally responsible for it. Otherwise a phone call from a lawyer or a journalist should shake the tree a little for you.

If it is being kept then your employer should either trust you or give you a copy of the passport and all pages and a contact name and number of who to call should you be stopped and asked to provide id.

You have legal status here?

What Lukereg says is correct

The passport is the property of the government that issued the passport.
You should ask for it back and give your employer a copy of the relevant pages.

As a last resort you can contact your Embassy for advice.