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 yesterday.

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

More than 500 employees in Kader clashed with factory security guards, smashed factory offices and police vehicles on 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 (US$146) for most employees, a protesting employee said early yesterday.

The company 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 would not get the bonus. It's 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.

"They rallied at the company's gate late on Tuesday afternoon and were soon joined by their coworkers," a witness said.

About 1,000 police and security guards were called in to disperse the crowd. This infuriated the protesters, 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 yesterday.

Editor: Yan