The B.C. Court of Appeal has ruled in favour of the B.C. government on the long-running dispute with the B.C. Teachers' Federation over the removal of class size and special needs support formulas from classrooms.

In a released Thursday, four of five appeal court judges found that the province did not infringe on the constitutional rights of teachers to bargain working conditions. The appeal court pointed out numerous errors in a pair of judgments by B.C. Supreme Court justice Susan Griffin, and overturned her order that the government pay $2 million in damages to the union.

BCTF president Jim Iker said the decision is "very disappointing." The union will seek leave to appeal to the Supreme Court of Canada in its bid to restore classroom rules the government removed from its contract in 2002. He said the union will repay the $2 million the government paid after last year's decision.

"All teachers are looking for is workable and teachable classrooms," Iker said.

Education Minister Peter Fassbender said the changes made to classroom organization in the disputed period have led to "dramatic improvements in student outcomes, particularly for students with special needs."

The B.C. education ministry has argued that caps on class size and number of students in each class with personalized learning plans were unduly restrictive.

The NDP government of the late 1990s negotiated a settlement where the BCTF gave up salary increases in exchange for class size caps, specialist teacher levels and limits on the number of designated special needs students in each class.

The decision leaves in place efforts by the government to settle the bitter dispute, including a provision in the current contract to pay $105 million to the union to retire thousands of grievances filed over class size and composition.

The six-year agreement signed last fall also includes additional preparation time and a "learning improvement fund" to deal with special needs support.