Labour negotiations between CN and the Teamsters union representing workers at the country's largest railway have broken down, and union leaders are warning that a strike or lockout could occur before the end of October.

The workers' contract expired July 22 and conciliation talks broke down Oct. 7, and the two sides are now in a 21-day cooling-off period, according to the ​Teamsters Canada Rail Conference (TCRC), which represents 3,300 conductors, trainmen, yardmen and traffic co-ordinators.

The union said in a news release Monday that the Canadian National Railway Company rejected its latest offer and refused to extend the conciliation period past Oct. 7.

The two sides are scheduled to resume collective bargaining on Oct. 21, with the help of the federally appointed mediators who were part of the conciliation process, but the mediation period expires at midnight on Oct. 28.

"After that, the company could implement unilateral changes to the collective agreement, lock us out or we could go on strike," TCRC general chairman Roland Hackl said in an email to CBCNews.ca.

"The earliest date for action by either CN or the TCRC would be [12:01 a.m.] Oct. 29, but either party would have to give 72 hours’ notice prior to that time. Of course, that doesn’t mean that negotiations can’t continue beyond Oct. 29."

Hackl said the union felt the need to inform the public about the potential for a labour disruption so that there would be no surprises.

"We know that there are many industries dependent on the railway and don’t want to inconvenience them. We do, however, have to protect the rights of our members and won’t compromise on safety," he said.

Montreal-based CN said in an emailed statement that it hopes the two sides can reach an agreement within the mediation period.

"While the earliest date for a strike or lockout is [12:01 a.m.] Oct. 29, CN remains optimistic that it can negotiate an amicable settlement with the TCRC to avoid labour disruption in Canada," CN spokesman Mark Hallman said in an email to CBCNews.ca.

But TCRC spokesperson Stéphane Lacroix did not share that view, saying a strike or lockout was a distinct possibility.

"At this moment, it doesn't look good," he said in a brief telephone interview with CBCNews.ca.

Rail safety under scrutiny

Wages and the retirement plan are not key issues in this round of bargaining, the union said, but management has demanded some concessions around what work can be done by conductor-only crews and how long those crews are required to work that would result in CN employees working longer hours with less rest time between trips.

Such an approach "flies in the face of scientific research on fatigue management," the union said in its release, especially in an era when incidents such as the deadly Lac-Mégantic derailment have underlined the importance of rail safety and when railways like CN have vowed to make safety their main priority.

Hackl said CN is seeking to remove some of the limits on when a train can be operated without a brakeman. Currently, a train can be operated without a brakeman only if the conductor's work is limited to getting the train from Point A to Point B.

The company refers to this as an increase in productivity. We see it very clearly as requiring an employee to perform more work for more hours. - Roland Hackl, general chairman TCRC

"These limitations ensured the safe operation of the train and prohibited situations where a single conductor would be required to switch industrial facilities or assemble a train from multiple tracks unnecessarily," he said. "Currently, this type of work is performed by a brakeman and conductor or a yard crew. It is the majority of these limitations that CN is seeking to remove."

The company is also looking to extend the period of how long crews are sometimes required to work from 10 hours to 12 hours, which it can do, Hackl said, because rail crews are exempt from some provisions of the Labour Code and can be required to work up to 12 hours on any one shift and 18 hours in a 24-hour period.

"We end up with a single conductor performing the work of two people for two hours longer each time they go to work," Hackl said. "The company refers to this as an increase in productivity. We see it very clearly as requiring an employee to perform more work for more hours, which will end up with fatigued employees operating dangerous equipment, and that’s when accidents are likely to happen."

The rest times crews are currently entitled to take when they arrive at their destination or at their home terminal would also be cut back under the company's current demands, he said.

CN would not comment on the substance of the contract talks but said that none of its bargaining proposals would "in any way compromise the health and safety of TCRC members."

Past disputes ended with legislation

A labour dispute at CN in 2007 disrupted freight service and impacted several industries that rely on the rail service, including agriculture and manufacturing. Conductors and rail yard workers, then represented by the United Transportation Union, went on a 15-day strike in February and were later locked out by management when they rejected a deal that ended the initial strike and began a series of rotating strikes in April.

The dispute ended with the government passing back-to-work legislation and appointing an arbitrator to impose a contract.

Back-to-work legislation was used again in 2009 to swiftly end a strike by locomotive engineers, who walked off the job after more than a year of failed contract negotiations when CN tried to impose a contract after the union refused to agree to binding arbitration.