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Rugby Australia and Israel Folau are both disappointed after they failed to reach an agreement over the former Wallaby's sacking.

The dispute between Rugby Australia and Israel Folau is destined for court after the parties failed to reach an agreement over the former Wallaby's sacking.

Representatives from both parties met at the Fair Work Commission on Friday for a mediation hearing as part of Folau's unfair dismissal case.

"We are disappointed that we were unable to reach settlement with Rugby Australia today," Folau's lawyer George Haros told reporters in Sydney.

"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 multi-million dollar contract over a social media post in April condemned as homophobic.

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.