The proposal was made in hopes of preserving the academic year for students and ending the strike immediately, U of T President Meric Gertler said at a news conference on Wednesday. Gertler said the two sides "are at an impasse."
The Canadian Union of Public Employees 3902, Unit 1, rejected a tentative contract settlement on Monday with a vote of 1,100 to 992, continuing the strike.
Now, Gertler is turning to arbitration to end the weeks-long work stoppage.
"We think this is the most expiditious way of doing this," Gertler said. "This is an indefinite offer, but time is of the essence. We are proposing this so that we can end the strike today."
CUPE 3902 Unit 1 represents 6,000 workers. Union members have been on strike since Feb. 27.
Teaching assistants and course instructors have been without a contract for more than 10 months.
Members say tuition fees in Ontario are the highest in Canada, and that the province spends the least per student in Canada.
The last round of negotiations broke down over the lack of a guaranteed per-minimum funding package that PhD and master's degree students receive for their work.
Under binding arbitration, an independent, neutral third party, would arbitrate all matters that remain in dispute and determine a final resolution that both parties would have to accept, the university said in a statement.
Agreeing to binding arbitration would also mean an effective and immediate end to the strike.
There was no immediate response from the union.