Claiming the passport of an employee from the old employer

I want to hire a young lady, but her previous employer is holding her passport.

They are requesting her to provide an entry visa from the new employer (me). An entry visa is when she exits the country, correct?

She will not have to exit if she can get her passport for me to process her new resident visa, correct?

Her old employer is based in Abu Dhabi and they state this is how Abu Dhabi does things.

I am confused because they shouldn't be holding her passport first of all, and they shouldn't have an entry visa to release her passport.

Please advise.