(Adds quotes from CP, union, opposition party)
By Leah Schnurr
OTTAWA, Feb 16 (Reuters) - Canadian Pacific Railway and the Teamsters Canada union have agreed to seek mediated arbitration, ending a one-day strike at the country's No. 2 railway, Canada's labor minister said on Monday.
"The strike is over," Labour Minister Kellie Leitch told reporters. "Our intention is to get service working at 100 percent by tomorrow morning."
The government had planned to introduce back-to-work legislation on Monday afternoon to force more than 3,000 locomotive engineers and conductors represented by the Teamster Canada Rail Conference (TCRC) union back on the job.
"We are now going to mediated arbitration with respect to these parties," said Leitch, who has been involved in the talks. "I do believe there are still numerous issues on the table, and I'm confident that the mediation and arbitration process will get them to the place they need to be."
Leitch had previously estimated the strike would cost the Canadian economy, which has already been dealt a blow by plunging oil prices, about C$205 million a week. An arbitrator will be appointed by the federal government, CP said.
CP and the Teamsters Canada union failed to agree on terms including scheduling and rest time, prompting train engineers and conductors to walk off the job on Sunday. CP had reached a deal with another union, Unifor, which represents safety and maintenance workers.
"This decision ensures both sides will get back to the table," CP's Chief Executive officer Hunter Harrison said in a statement. "While we would have preferred a negotiated settlement, this is the right thing to do at this time."
In recent years, the government has intervened, or threatened to, in several major transportation-related labor disputes including at CP, where it introduced legislation that ended a nine-day strike in 2012.
Alexandre Boulerice, the labor critic for the opposition New Democratic Party, derided Monday's threat of impending back-to-work legislation as not being helpful to any of the parties involved.
"The threat of a back-to-work legislation is always the worst option," Boulerice told reporters. "The best option is always a free collective agreement, free negotiations."
Doug Finnson, president of the TCRC, said a legislated process would have been "the worst thing that could happen" and called the use of mediation and arbitration "the better option".
One of the major issues to be discussed is fatigue management and the necessity of implementing effective countermeasures for rail workers, the union said. (Additional reporting by Nicole Mordant in Vancouver; Editing by Amran Abocar, James Dalgleish, Chris Reese and Marguerita Choy)