The Amalgamated Transit Union and the city have been negotiating for 11 months.
The union rejected the city's final contract offer.
Marno McInnes, director of Human Resources, told CJWW that the city's financial position and its general pension plan are at risk.
He says the decision for a lockout was not taken lightly and there were concerns over transit service disruptions especially with winter coming.
Workers will be locked out at Saturday at 9 p.m. if no contract is reached.