Rugby Australia and Israel Folau have failed to reach an agreement over the ex-Wallaby's sacking after a nearly four-hour meeting at the Fair Work Commission.
The dispute now appears destined for the Federal Court.
“Very, very disappointed by the outcome,” Folau told reporters in Sydney.
“I’d like to thank all those who have supported me throughout this time.
“I will continue to stand up for the freedoms of all Australians.”
Folau’s lawyer George Haros said they’re likely to pursue action in court.
“It appears as though, unless things change, then we will be heading for court,” he said.
Rugby Australia respond
Rugby Australia and NSW Rugby Union also said they were “incredibly disappointed” the conciliation had been unsuccessful and failed to reach a resolution.
"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.
Earlier, the ex-Wallaby was swamped by media when he arrived on Friday for the meeting with RA - the first formal step in his unfair dismissal case.
Asked what he wanted out of the closed conciliation, the 30-year-old committed Christian told reporters: "Hopefully an apology from Rugby Australia. That would be great."
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Folau shook hands and thanked a supporter, who said "God go with you brother ... we're praying for you".
RA tore up Folau's multi-million dollar contract after taking issue with a social media post in April that was condemned as homophobic.
Folau had paraphrased a Bible passage saying "drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolaters" would go to hell unless they repented.
He argues he was unfairly dismissed on religious grounds.
Folau is seeking $10 million in damages from RA and wants his multi million-dollar contract reinstated.
In a video posted on his website before Friday's meeting, Folau said he hoped RA would accept his termination was unlawful and reach an agreement about how to fix the "mistake".
"First and foremost, I am hoping for an apology from Rugby Australia and an acknowledgement that even if they disagree with my views, that I should be free to peacefully express my religious beliefs without fear of retribution or exclusion," he said.
Massive new allegation
Folau claimed on Thursday that RA had offered him money to remove the post at the centre of the dispute, and he had declined because sharing the Bible was one of his duties as a Christian.
"I couldn't do that ... I couldn't live with that," Folau said.
"It certainly comes from a place of love and it's nothing personal."
But RA says Folau's claim is "completely untrue" and it never offered him money to remove the posts.
More than 20,000 people have donated about $2.2 million to help fund Folau's legal battle via a campaign page set up by the Australian Christian Lobby.
The ACL effort replaced an earlier campaign on GoFundMe, which was taken down by the platform for breaching its service guidelines.
"I want to thank you all for your prayers and your support. You have made it possible for me to stand up for every Australian of faith," Folau said.
"I know we are strong enough to tolerate different views without firing people from their jobs for expressing religious beliefs that not everybody agrees with."