Canadian National Railway and the union for more than 3,000 conductors, train and yard workers have reached an agreement in principle on a new collective agreement, averting a possible labour disruption that could have started early Tuesday morning.

Teamsters Canada Rail Conference president Doug Finnson told CBC News the two sides are still working on the wording of the agreement.

A CN spokesman said the company was pleased to have reached a verbal agreement with the union.

A new deal must still be ratified in a vote by union members over the coming days and weeks.

Last week, the Teamsters union announced its members had voted 98 per cent in favour of a strike mandate. They would have been in position to go off the job at 4 a.m. ET on Tuesday.