The $10m Israel Folau demand that could bankrupt Rugby Australia

Israel Folau could bankrupt Rugby Australia if it is successfully argued that his contract was unlawfully terminated because of his religion.

Lawyers filed applications with the Fair Work Commission on Thursday against both the NSW Rugby Union and the national governing body following Folau's sacking last month after his controversial social media posts on his religious beliefs.

He is seeking $5 million in lost salary and "substantial damages" that could add up to a bill worth eight figures, threatening RA's future.

Having been warned last year by RA boss Raelene Castle, the 30-year-old dual international posted a bible passage on Instagram proclaiming hell awaits "drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolaters" unless they repent their sins.

After an epic code-of-conduct hearing stretching 22 hours over three days and featuring some of the sharpest legal minds in Australia, RA and the Waratahs terminated Folau's multimillion-dollar contract on May 17 citing a "high-level" breach of his contract.

Folau had 72 hours to appeal the judicial panel's decision at a second code of contract hearing, but opted against doing so, saying he had lost faith in RA's ability to treat him fairly or lawfully.

Israel Folau pictured leaving his code of conduct hearing last month. Pic: AAP
Israel Folau pictured leaving his code of conduct hearing last month. Pic: AAP

He will now argue that under the Fair Work Act his employment was unlawfully terminated because of his religion.

"I will forever be grateful and proud to have played the sport I love for our nation," he said in a statement.

"Ours is an amazing country built on important principles, including freedom of religion. A nation made up of so many different faiths and cultural backgrounds will never be truly rich unless this freedom applies to all of us.

"No Australian of any faith should be fired for practising their religion."

‘Damages will be substantial’

Documents lodged with the commission claim the sacking meant Folau was prevented from playing at the peak of his career and on the cusp of a Rugby World Cup, which would have generated greater exposure and opportunities.

"The termination has cost Mr Folau the best years of his rugby career, participation at the Rugby World Cup, the chance to become the greatest Wallaby try-scorer (a decades-old record he was likely to break), and the associated exposure and opportunities," Folau's application stated.

The document hints at a significant total financial blow nearing or surpassing $10m if Folau wins.

"As well as around $5 million in lost salary, Mr Folau will claim in respect of the loss of these opportunities (renewal of contract, sponsorships, etc),” it continued.

Israel Folau played his last game for the Waratahs in April. Pic: Getty
Israel Folau played his last game for the Waratahs in April. Pic: Getty

"The damages will be particularised in due course, but will be substantial. In addition, Mr Folau will seek civil penalties."

Such a bill could bankrupt RA, which has already budgeted for a loss of $8m in the upcoming financial year.

RA announced in April it had turned a $3.8m deficit from 2017 into a net surplus of $5.2m for 2018.

That surplus came on the back of dumping Western Force from Super Rugby, a move that saved the organisation more than $6m.

RA expects to lose money this year because the Rugby World Cup, beginning in September, restricts the number of Test matches played at home.

with AAP