Blackwell was supposedly dismissed on Wednesday after a poor run of results but Bates has used comments made by the former manager in papers and on radio as the real reason for his exit.
Blackwell complained about the financial state at Leeds as he struggled to maintain the form of last season and that was seen as undermining the chairman and club.
It will be a massive blow for the former Sheffield United coach, who only signed a three-year contract before the promotion play-offs and thought he would have at the very least the consolation of a golden handshake.
However Bates came up with the 'gross misconduct' verdict as he was dismissed and now there will be some lengthy discussions before there is any cash settlement.
Blackwell has also been banned from returning to the club or training ground and is at his family home near London having been unable to say farewell to his players.
A Leeds spokesman could not confirm or deny the reason for Blackwell's sacking.