Talks have broken down between the City of Charlottetown and the union representing 24 workers with the water and sewer utility.
The workers have been without a collective agreement since the end of December.
CUPE spokesman Bill McKinnon told CBC News Friday that progress was being made on a number of non-monetary issues, but once the discussions turned to money the situation changed.
"It was a little disappointing because we were moving relatively well in recent days and we thought that that was a sign that maybe the city was looking for a fair settlement," said McKinnon.
"But as is not uncommon, once we got to monetary we certainly had different perspectives."
The union has now filed for conciliation with the labour minister.
The employees maintain the water distribution and collection system for the city, and have the right to strike.
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