Undercover filming by local television channel Dragon TV allegedly showed workers using meat that had been on the floor, as well as out-of-date beef and chicken.
Of the 340 workers, 226 are directly employed by Shanghai Husi and 114 are contractors to the company.
OSI China said earlier this week (22 September) that it was implementing a worker redundancy plan for its Shanghai Husi employees, which has been reviewed by local government and the trade union.
According to the firm, the employees, most of which have been on paid leave since 21 July, 2014, have been notified and advised of their options. The feasibility and method of severance payments is being explored and OSI China is also working with local government agencies to provide support to affected workers, including career development and skills training.
"It was our expectation that they could resume their work as soon as possible. Unfortunately, due to circumstances beyond our control, this will not be the case," said a statement by OSI China. "It is very unlikely that production will be resumed soon. A small number of staff, however, must be retained in order to assist with the ongoing authorities’ investigations – as such, Shanghai Husi cannot be fully shut down at this stage."
The company said that Shanghai Husi had experienced significant financial and customers losses over the past two months, with investigations still ongoing.
Six employees at Husi Food Co were arrested earlier this month as part of these investigations, "following detention by authorities".