Victoria University says it stands to lose $3 million if just one of its academics fails to make the grade in a national evaluation of research in tertiary institutions.
The Tertiary Education Union is dismissing the suggestion and says a letter to a university staff member on the matter is a sign of hysteria about the assessment.
The university says the figure relates to institutional funding, not to money allocated to individuals.
It says the point it made, in a letter to a staff member, is that individual performance matters to overall ranking.
But the union says Victoria University is wrong, and a single under-performing staff member would cost the institution no more than a few thousand dollars.