A Greyhound bus waits outside the bus terminal in Windsor, Ont. The company says roughly 500 Greyhound Canada employees would have been locked out at 12:01 a.m. Thursday if there had been no progress in contract talks. (CBC)

A labour dispute that threatened to halt Greyhound bus service in Ontario and Quebec has been settled.

"We are pleased to have agreed upon this contract and plan to continue to provide transportation service to the citizens of Ontario and Quebec," Greyhound spokesperson Timothy Stokes said Wednesday afternoon.

"All schedules should operate as normal and we look to have no delays due to our recent discussions."

Some 490 Greyhound employees, including 320 drivers, could have been locked out as early as Thursday if the dispute over wages and pensions had not been resolved.

The agreement is subject to union ratification.

"We've presented a final offer that we feel is fair and equitable," Greyhound spokesperson Bonnie Bastian said.

If a deal hadn't been reached, thousands of passengers on 27 bus routes across the two provinces could have been stranded.

"This is the only means of transportation for me," Shahab Haque, a student at the University of Windsor in southwestern Ontario, said before the deal was announced. "Very few times I get a car pool, but normally I take the bus.

Last week, drivers and maintenance workers rejected Greyhound's latest offer by an 87 per cent margin.

Workers didn't like a proposed two-year wage freeze and a reduced pension plan. Driving hours were also an issue.