Rugby Australia chairman Cameron Clyne has unloaded on Israel Folau while defending his organisation's decision to terminate the ex-Wallaby's contract.

In an interview with Nine newspapers after the two parties failed to reach an agreement over the former Wallaby's sacking in Sydney on Friday, Clyne said the game had no other option.

"(The alternative] would be that we'd have no sponsors at all because no sponsor has indicated they would be willing to be associated with social media posts of that sort and that includes government, because we've also heard from them," he said.

"We would also potentially be in litigation with employees who are gay and who would say we're not providing a workplace that is safe or respectful."

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Clyne also rubbished suggestions RA had been dictated to by sponsor Qantas. "That's simply wrong. Sponsors have a right to associate themselves with a game they feel best represents their values, but it is absolute nonsense to suggest it was done at the behest of a sponsor," he said.

"Having said that I haven't had any sponsor come forward and say they were happy with the post or happy to be associated with it. But it's offensive to suggest we get our moral compass from someone else."

Representatives from both parties met at the Fair Work Commission for a mediation hearing as part of Folau's unfair dismissal case, news.com.au reports.

"We are disappointed that we were unable to reach settlement with Rugby Australia today," Folau's lawyer George Haros told reporters. "It appears as though that unless things change, we'll be heading to court."

RA and NSW Rugby Union also said they were disappointed with the outcome. "We remain confident in our processes and will continue to do what is required to defend the values that underpin our game," RA said in a statement.

Folau had hoped RA would apologise for terminating his multimillion-dollar contract over a social media post in April condemned as homophobic.

"I'm not sure exactly what we're apologising for, I don't quite understand that request," Clyne told Nine newspapers.

"We've provided a player with opportunities and asked him to adhere to a contract and a generous one at that. Israel was not sacked for his religion, he was sacked for a breach of his contract."

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The 30-year-old's post paraphrased a Bible passage saying "drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolaters" would go to hell unless they repented.

The committed Christian argues he was unfairly dismissed on religious grounds, and is seeking $10 million in damages from RA and wants his contract reinstated. An online fundraiser supported by the Australian Christian Lobby this week raised about $2.2 million to fund his legal battle.