Via Rail trains will be rolling again later Sunday after the company and the union for striking locomotive engineers agreed to settle their differences through binding arbitration, ending a two-day walkout.

The Teamsters Canada Rail Conference and Via Rail came to an agreement early Sunday morning after meeting with a federally appointed mediator.

The strike had paralyzed train passenger traffic across the country and forced Via to issue ticket refunds to thousands of customers.

Via Rail Canada normally shuttles about 11,000 passengers around the country every day — and as many as 12,500 daily during the summer tourism season.

Improved work schedules, benefits and training are among the demands of the 340 engineers, who have been without a contract for 2½ years.

Via Rail announced Saturday that it had issued layoff notices to hundreds of employees who work on trains and in stations and maintenance centres. Those employees have been recalled, said Via Rail spokesman Malcolm Andrews.

"We're very happy to get things moving during this incredibly important time of year," Andrews said after announcing that arbitrator Michel Picher will be ruling on outstanding issues in the dispute.

Via Rail will be looking at "innovative" ways to apologize to customers for the inconvenience caused by the strike, he said.

Via Rail has 10 departures scheduled Sunday, starting around 6 p.m. ET.

Trains will leave Montreal for arrivals in Halifax, Gaspé, Ottawa, Toronto and Quebec City. Others will leave Toronto for Montreal and destinations in Ontario, including Ottawa, Sarnia, Windsor and London.

Full service on routes across the country was to be restored on Monday.