The B.C. Teachers Federation is calling for a mediated settlement to the teacher's contract dispute after the provincial government said Thursday it is preparing legislation that would impose a deal.

BCTF President Susan Lambert told a Vancouver news that the federation representing B.C.’s 40,000 teachers was urging the B.C. School Employers Association to accept mediation as a fair alternative to an imposed contract.

“This government has a choice,” Lambert said. “It can help find the compromises necessary to reach a settlement, or it can use bullying legislation that will only make matters worse.”

Education Minister George Abbott said earlier Thursday the government would draft legislation to end the contract dispute between teachers and the government over the weekend.

Abbott revealed the plan after receiving a special fact-finding report into the stalled negotiation on Thursday morning.

"There is probably zero prospect of a resolution of this dispute. All of this, I must say, leaves me deeply disappointed that we are in the position we have been in far too many times over the last 30 years," said Abbott.

Abbott said later he would consider appointing a mediator, but only for non-monetary issues. He said there remained "a chasm" between the two sides on the issue of salaries, which would not be mediated.

The fact-finding report, by Trevor Hughes, the assistant deputy minister of industrial relations, found that despite almost one year of negotiations and more than 75 face-to-face sessions, the parties have not been able to narrow the outstanding issues.

Contract talks between B.C. teachers and school employers have stalled for months. (CBC)

Hughes found it's very unlikely B.C.'s teachers will reach a voluntary agreement with their government employers.

"The net zero mandate is a fundamental obstacle," concluded Hughes, referring to the government's position that there can be no net gain in wages or other benefits in any new public sector contract.

Premier backs 'net-zero' mandate

Hughes was asked by the government to investigating the likelihood of a negotiated settlement between the B.C. Teachers Federation and the B.C. Public School Employer's Association.

The report was delivered to Labour Minister Margaret MacDiarmid on Thursday morning, who passed it on to Education Minister George Abbott.

During a morning appearance at the Burnaby Board of Trade, Premier Christy Clark reiterated her government's position on net-zero wage increases.

"When my government has a choice between lowering taxes and increasing spending, we are going to lower taxes and you will also see this in my approach to labour. I will not raise taxes on families to fund pay hikes for public sector unions." said Clark.

Lambert said that calling for mediation is an exceptional and unusual step for any union.

“But it’s one we are prepared to take in the hope of achieving a settlement and avoiding the damaging repercussions of an imposed contract,” she said.

As part of their job action since the school year started in September, teachers have stopped doing administrative work, have limited their dealings with parents, refused to supervise playground activities or produce report cards.