A leading toy producer in south China's Guangdong Province has agreed to renew its labor contracts with some senior employees following a violent protest by employees on Tuesday, a Chinese official said Wednesday.

The board of directors of the Hong Kong-funded Kader toy factory in the Zhongtang Township in Dongguan City has also agreed to, in accordance with the law, offer a new plan about giving economic compensation and bonuses to the employees who terminated their contracts, said Li Zhihui, head of the Zhongtang Township.

More than 500 employees in Kader clashed with factory security guards, smashed factory offices and police vehicles Tuesday night in a labor dispute.

Most of them had been told by their employer that it would terminate their contracts with an average compensation of one month's wages. That would be less than 1,000 yuan (about 143 U.S. dollars) for most employees, a protesting employee told Xinhua early on Wednesday.

In addition, the employer said it would give a bonus to those employees who had worked there for at least seven years and who had made no mistakes in the past, Li said.

According to the plan, a year's work for Kader qualified an employee for a month's bonus -- that would be 1,030 yuan a month for office clerks and 770 yuan a month for workers.

"But once an employee had made a mistake, he or she wouldn't get the bonus. It's none other than this precondition that sparked discontent among employees and led to the protest," he said.

At least 80 employees, having worked for nearly 10 years at the factory, were unhappy with the arrangement and demanded more compensation, a protesting employee told Xinhua early on Wednesday.

"They rallied at the company's gate late Tuesday afternoon and were soon joined by their co-workers," said a witness on condition of anonymity.

About 1,000 police and security guards were called in to disperse the crowd. This infuriated the protestors, who overturned a police vehicle, smashed at least four police motorbikes and broke windows and computers in the factory's office building, said the witness and a spokesman with the township public security bureau.

Witnesses said at least five employees were injured. This figure has not been confirmed by police.

The violence had stopped by Wednesday morning.

The factory managers fled their offices on Tuesday night.

The employees claimed their employer, the Hong Kong-based Kader Holdings Co. Ltd. that produces toys for several major international brands, was trying to evade its obligations under China's labor contract law, which came into effect early this year.

The new law requires employers to sign unlimited-term contracts with employees who have worked for more than 10 years. Some employers, however, believe such contracts will be a burden.

Liu Xiyuan from the central province of Hunan, who has been working at Kaida for 21 years, said he turned down compensation equivalent to eight months' wages when his contract expired on Nov. 19. "If I had accepted the compensation, it would have meant all my 21 years of work wouldn't count," said Liu, 45.

One employee, who refused to give his name, said he accepted 4,000 yuan in compensation for having seven years of work written off.

Kaida, which employs more than 6,500 people, terminated contracts with 380 employees on Nov. 19. Another 216 contracts had been scheduled to be terminated on Wednesday.

Li said the protest was not a result of the global financial crisis.

"It's because the employer fails to understand the labor contract law well and lacks thoughtful consideration while making arrangements for the employees," he said.

He said the township government has set up a working team to handle the issue together with the employer and employees.

"We will strictly abide by the labor contract law and prevent further problems from arising," he added.

(Xinhua News Agency November 27, 2008)