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A Canadian government-appointed arbitrator on Friday chose Canadian National Railway Co.’s best three-year contract offer instead of United Transportation Union-Canada’s, but the union is claiming victory over work rules and other stipulations.

Covering 2,800 UTU-represented workers and expiring July 22, 2010, the chosen contract offer calls for 3 percent annual wage increases, a $1,000 signing bonus per employee and an additional 3 percent pay hike retroactive to Jan. 1, 2007.

The Canadian government ordered binding arbitration after UTU-Canada conducted a 15-day strike in February and union members voted down a tentative one-year agreement in April.

“This reinforces our belief during negotiations that CN’s wage and benefits packages are fair, competitive and reasonable,” said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. “The final offer is consistent with what we’ve been offering from the beginning of the negotiation process, while the union’s original demands were significantly higher.”

Although the union would have preferred the arbitrator chose their final offer, CN’s best offer keeps a collective bargaining agreement intact, said UTU Vice President John Armstrong. The contract retains mileage limitations, personal leave days and time-off provisions, and excludes an hourly rate agreement, which “was of major concern to the membership,” he said.

“That means that significant work rule changes CN was seeking were not included in their final offer,” said Armstrong.