UPDATE: JAMES Hird's lawyers says he will fight to protect his right to his $1 million salary while serving his 12-month suspension.

The AFL sensationally announced at 1.22pm that it was holding back discretionary funding to Essendon until it explained why it was continuing to pay Hird's wage.

The Herald Sun understands the amount being withheld is a high percentage of AFL distributions to the club. The AFL's annual distribution to Essendon, in the year ending October 31, was $8.4 million.

The Bombers also receive several million dollars more from the clubs' future fund.

Hird's lawyer, Steven Amendola, hit back within an hour of the AFL statement, saying the sanction deal Hird signed off on was with the AFL, not Essendon, and did not include any pay ban.

News_Rich_Media: AFL CEO Andrew Demetriou did not respond to media questions as he arrived for work at AFL house. Courtesy Seven News

"The people who agreed to the terms of the suspension were not Eseendon and the AFL, it was James Hird and the AFL," Mr Amendola said.

"The AFL can write to the Essendon FC as much as it wants to about the agreed settlement.

"But it was very clear on the night (the August 27 hearing settlement) that Hird would be paid by the Essendon FC during his period of suspension.

"I am happy to elaborate on why it was clear that he would be paid if the AFL want to continue to assert that he wasn't going to be paid."

In the statement released this afternoon, the AFL said it had written to the Bombers telling the club that Hird "could not work for any club in any capacity or receive a salary from any club".

The league said it had written to the club on December 6 and again on Monday with a "please explain".

CLICK HERE TO READ THE AFL STATEMENT IN FULL

AFL CEO Andrew Demetriou said AFL Legal, Integrity and Compliance general manager Andrew Dillon had informed Essendon in writing this week: "The clear intention from the outset of James Hird's 12-month suspension by the AFL was that he could not work for any club in any capacity or receive a salary from any club.

"Since September, the AFL has been in consultation with the Essendon FC concerning the terms of James Hird's suspension, including the fact he cannot be paid by the club for a period of 12 months," Mr Demetriou says in the statement.

The statement continues: "Mr Dillon was awaiting a formal reply from the club. Until that reply was received, the club has been informed the AFL will withhold an amount from regular AFL discretionary distributions to the Essendon FC each month."

But Mr Amendola said Hird's salary was enshrined in a three-year contract.

"My client never pleaded, nor was found guilty of breaching the player rules," he added.

Mr Demetriou also announced in its statement that the issue could be referred back to the AFL Commission which ruled on the original hearing in August.

"The Essendon FC has also been advised in writing that if the club continues not to comply with the terms of the suspensions, the matter will be referred to the meeting of the AFL Commission in Melbourne next week," he said.

News_Image_File: Tania Hird says it's time for the AFL to stop "threatening" husband James. Picture: David Caird

Essendon issued a statement at 3.59pm, saying it had been in regular contact with the AFL about the terms of James Hird's suspension.

"The club will respond to the AFL's statement relating to this matter in due course and will not be making any further comment until that time," it says.

The issue has escalated as a result of Tania Hird's attack on the AFL yesterday, revealed exclusively in the Herald Sun.

In her first public comments since footy's supplements scandal broke in February, Hird's wife told the paper that Mr Demetriou's claims that the suspended coach was banned from receiving a salary were a nonsense.

Mrs Hird accused the AFL of a "total disregard for the truth" and "appalling" behaviour throughout the drugs saga, also calling on the league to stop "threatening" her husband and Bombers.

Today Mrs Hird emerged from her Toorak home with her children this morning, unwilling to answer questions though stating they were "going to see Santa".

Her husband left in a hurry earlier but returned at 1.30pm.

Asked to confirm whether he was being paid by Essendon, he said: "I think that was talked about this morning".

Asked whether he was concerned about Mr Demetriou's denials that he was being paid, he replied: "No, I'm not concerned at all."

He again left his home after 4pm, telling waiting reporters: "Sorry guys, no comment."

A furious Mrs Hird told the Herald Sun yesterday that the Essendon coach accepted his ban only as a result of threats.

"James took a 12-month suspension because he was threatened," she said.

"The club was threatened, he was threatened.

"In the end the club said, you know, it's in the best interests of the club, we need to move on, which is what we did."

"Of course he's being paid, that was the deal," Mrs Hird added.

"Andrew Demetriou knew it, the AFL knew it."

News_Image_File: James Hird leaves his Toorak home this morning. Picture: Nicole Garmston

Mr Demetriou said in his statement today: "The public statements from the AFL, from myself as CEO over the last week, were in the belief that Essendon had concluded its payment arrangements and begun the suspension period. The AFL has since sought confirmation and is yet to receive it."

Mr Demetriou issued the categorical statement last Wednesday that Hird was not being paid by the AFL or by Essendon.

"If there is one thing I will go to my grave on, I know 100 per cent the AFL is not paying and I know that Essendon is not paying," the league chief told 3AW.

It was revealed last week within hours of Mr Demetriou's pay claims that Hird was still pocketing a salary.

The league then admitted there was nothing in writing in the AFL Commission's final agreement on sanctions but claimed Essendon gave a verbal guarantee not to pay Hird two weeks after the August hearing.

But Mrs Hird, a commercial property lawyer, rubbished the assertion in her interview with the Herald Sun.

"You can't change an agreement without somebody's knowledge and without their say so," she said.

"James agreed to a sanction with pay and that's what it was, Andrew knew that."

News_Module: James Hird timeline

Asked whether she believed the AFL boss should clarify the situation, she said she could not tell Mr Demetriou what to do.

"There's a lot of things I would like to say to Andrew Demetriou over this year but I think I've said enough," she said.

Mrs Hird said the public was not being given the whole truth about the supplements scandal that rocked Essendon and the AFL and the subsequent hearing.

"It's just the distortion of the truth and, you know, it's been really hard to take," she said.

News_Module: Essendon timeline

Mr Demetriou raised the pay issue in a response to revelations that Hird had been given inducements, including a guaranteed salary during any suspension, amid secret negotiations between Australian Sports Commission chairman John Wylie and Bombers chairman Paul Little.

News_Module: Essendon timeline

Mrs Hird launched her tirade after being approached outside the family's Toorak home.

The mother-of-four added that Hird would have taken the AFL to court if pay was not on the table.

"We wouldn't have taken a sanction without pay, we would have taken the AFL to the Supreme Court and they knew that, Demetriou knew that," she said.

- with Grant Baker