MONTREAL, Aug 12 (Reuters) - Air Canada ( ACDVF ) flight

attendants rejected the airline's proposal for binding

arbitration on Tuesday and continued direct talks, the Canadian

Union of Public Employees said on Tuesday.

Flight attendants, who demonstrated on Monday at major

Canadian airport hubs, could strike as early as August 16.

Higher wages and ending the current practice of paying

flight attendants only when the plane is in motion are key

issues in the contract talks. Flight attendants at U.S. carriers

such as American Airlines have made some gains in recent

contracts.

The union said Air Canada ( ACDVF ) has offered to begin compensating

flight attendants for some work that is currently unpaid but

only at 50% of their hourly rate.

Air Canada ( ACDVF ) was not immediately available for comment. The

union represents the more than 10,000 flight attendants at Air

Canada ( ACDVF ).