The University of Manitoba had its hands tied due to a threat from the Pallister government that funding to the institution could be cut if it didn't freeze wages for faculty, the Manitoba Labour Board heard Wednesday.

According to testimony from Greg Juliano, the U of M's associate vice-president of human resources, the province mandated the university to rescind a four-year proposal offered to the University of Manitoba Faculty Association which included wage increases, and replace it with a one-year agreement with a wage freeze.

"It put us in a predicament, [where] the only approved mandate we had was zero per cent," Juliano told the board. "The implication from [government] is that our income could be impacted by our lack of co-operation."

Wednesday marked the second day of hearings at the board, which will determine whether the university bargained in bad faith during last fall's contract negotiations with faculty.

Email told university to only offer freeze, VP says

The faculty association argued in its complaint to the board filed last November that the university's choice to follow through on the government directive led to the three-week strike that began Nov. 1.

Through the complaint, the association is seeking compensation for faculty's lost wages from the university. If the board rules in the association's favour, it could also send both sides back to the bargaining table to renegotiate the contract, which ended the strike on Nov. 22.

At the centre of the argument is an email sent by Gerry Irving, the province's secretary of public-sector compensation, to Juliano on Oct. 6. The email, which was read in part by Juliano Wednesday, said that any wage increase had to be taken off the table.

"To be clear, the only mandate approved is a minimum one-year contract extension," the email stated, according to Juliano.

While he said his hands were tied, he also argued that by that point in bargaining, the faculty had already rejected a four-year offer with a one per cent increase in year one, and three years of two per cent increases.

"It didn't affect it at all," said Juliano when asked about the wage freeze mandate's impact on the strike.

Faculty says university had a choice

Mark Hudson, the president of UMFA, sees it differently.

Hudson gave almost a full day of testimony on Tuesday and argued that once wages are taken off the table, a necessary tool for negotiation disappears. He says once the union was told on Oct. 27 that wages were off the table, the ultimate outcome was the strike, which sent more than 1,200 faculty members to the picket line on Nov. 1.

"One of the functions that salary plays in the bargaining process is that it is a chip and provides latitude to bargain on almost every other issue," Hudson told CBC News following Juliano's testimony.

While he agrees that the university was in a tough spot and believes the Pallister government was too heavy-handed in its approach, ultimately the choice fell to the university.

"A university is an autonomous institution that has the ability to bargain and set salary," Hudson argued. "In this case there was no legislation, there was pressure brought to bear. Was it severe pressure? Or a threatening tone if they didn't remove salary off the table? I think yes, there probably was."

Juliano's testimony will continue Friday morning and remaining hearings are scheduled to start again in June.