Hudak fired Randy Hillier as PC labour critic for sending an email to caucus expressing concerns that the Tories could be open to criticism that they used a private members' bill to try to get donations from EllisDon, a large construction company.
At the very moment Hudak held a news conference to announce the appointment of Monte McNaughton as his new labour critic, Hillier issued a release saying he did not violate caucus confidentiality and never leaked the email to the media.
"Tim Hudak demanded that I both apologize for allegedly breaking caucus confidentiality and to publicly retract the comments I had made in the aforementioned email," said Hillier.
"I made it clear to Tim that under no circumstances would I retract the comments and concerns that I raised three months ago, and that I still stand by to this day."
Hillier did not release his original email to The Canadian Press, but confirmed a key part of its contents: "In caucus, it was stated quite explicitly that following a successful EllisDon fundraiser for Tim, our party would continue to benefit financially with the advancement of this legislation."
No other Tories have come forward to share Hillier's concerns, and the legislation to give EllisDon a break from a 1950s law requiring it hire only unionized workers was supported by both Liberals and Conservatives.
Hudak said Hillier was being benched because he's not being a team player, and demonstrated a "pattern of behaviour" that strained relations with his colleagues, but wasn't being booted out of caucus.
"He has an opportunity to continue to enjoy the privilege of sitting with the PC caucus, but he has to understand that politics is a team sport," said Hudak.
"It's not about Randy. It's about how we're going to turn our province around."
Last week, Hudak removed Peter Shurman as the PC finance critic after the Thornhill MPP refused to pay back a $20,000 housing allowance for a Niagara residence.
Hudak said he planned more changes to his shadow cabinet, but would not say if Frank Klees will retain a critic's post. Party insiders said Klees will not be demoted.
Klees and Hillier, both of whom lost the PC leadership to Hudak in 2009, were the only caucus members to say the Conservatives should amend their constitution so members can debate a leadership review at a policy conference in London next week.
However, Klees appears to have appeased his colleagues by clarifying his position.
"I know you're asking this question because of comments Frank made a few weeks ago," said Hudak.
"I know caucus was very appreciative of the fact that Frank was indicating full support for the leader and the team, and that he's voting against the amendment at the convention coming up next weekend."
Premier Kathleen Wynne said Friday she had no intention of taking advantage of the Conservatives' infighting and calling a snap election, insisting she wants to govern and make the minority legislature work.
Also on HuffPost