PRESSURE is growing on the deep-pocketed sponsors of Rugby Australia, with legal experts saying the likes of Qantas could be dragged into a brand-damaging legal case with axed Wallaby fullback Israel Folau.

Several lawyers have said Folau could go after sponsors for damages - in addition to his previous employer - if it can be proved that Rugby Australia's big wigs only acted to remove the star due to pressure from them.

Folau is seeking up to $10 million in damages from RA after it terminated his $4 million contract following an Instagram post that said gay people, along with others, were headed to hell unless they repented.

The former star player's lawyers said the sacking went against section 772 of the Fair Work Act, which bars discrimination in employment on religious grounds.

RA said it was justified to ditch Folau because of repeated breaches of the players' code of conduct.

RA's headline sponsor is Qantas but big brands backing the code also include Land Rover, Swisse and HSBC bank.

Michael Harmer of Hamers Workplace Lawyers said today it could work in Folau's favour to suck the sponsors into his stoush.

Fearing both reputational damage and a possible expensive ruling against them, RA's corporate backers may turn their focus on the code and urge it to settle with Folau.

"If you can pull in some of them, so they are in the melting pot, you would think pressure to get the thing fixed would come from the sponsors," Mr Harmer told The Australian.

"It would be wise to have a crack at some sponsors, particularly Qantas."

Israel Folau leaves a conciliation hearing at the Fair Work Commission in Sydney on Friday. Picture: AAP Image/Peter Rae
Israel Folau leaves a conciliation hearing at the Fair Work Commission in Sydney on Friday. Picture: AAP Image/Peter Rae

He said sponsors could be liable for penalties of up to $60,000 if a link could be proved between them and Folau's demise.

Speaking after the breakdown of a conciliation meeting between RA and Folau on Friday, the code's chairman, Cameron Clyne, said his former player's repeated posting of controversial social media comments had put him at odds with the Government, staff and sponsors and left it with little choice but to act.

"(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," Mr Clyne said.

Qantas CEO Alan Joyce has been vocal in his support of LGBTI rights. He was a high-profile corporate figure in the fight for marriage equality and Qantas is a sponsor of the Sydney Gay and Lesbian Mardi Gras.

That has also made him a target for some on the right of politics, including Home Affairs Minister Peter Dutton, who notably said in 2017 that Qantas should refrain from his public support for same-sex marriage and leave that to "elected decision makers".

Mr Dutton said CEOs should "stick their knitting".

However, Mr Joyce has been adamant RA's decision to sack Folau was its alone.

Mr Joyce said last month the insinuation the airline was involved in Folau's dumping was "outrageous" but the firm had asked RA what it was doing about the saga.

"Israel's comments were terrible for a large element of the community, and a vulnerable element of the community," Mr Joyce said.

"It is (RA's) issue to resolve, they have put a solution in place … and we're very supportive of what they're doing."

For his part, Mr Clyne said suggestions Qantas put direct on pressure on RA to ditch Folau were "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 on Friday.

But legal experts speaking to yesterday said Folau could have an avenue to strike out at the sponsors.

"The Fair Work Act has a section where a third party, such as for example a sponsor of RA, could also be held liable in certain circumstances," MKI Legal director Nicholas Marouchak said.

"Section 550 of the Fair Work Act, known as the accessorial liability provisions, could make a sponsor of RA liable if that sponsor was 'involved' in having Folau dismissed because of his religion.

"For a sponsor to be held liable, Folau has to first win his primary claim against RA and the sponsor would have needed to have essentially encouraged RA to sack him or provided other material assistance to RA in helping RA carry out the sacking, such as advising or counselling them in doing it."

Israel Folau conciliation meeting with Rugby Australia on Friday was unsuccessful. Picture: Mark Metcalfe/Getty Images
Israel Folau conciliation meeting with Rugby Australia on Friday was unsuccessful. Picture: Mark Metcalfe/Getty Images

Josh Bornstein, head of legal firm Maurice Blackburn's employment law group, told Folau could argue Qantas and others were accessories to the RA's alleged discrimination.

"There are two or three options if you can show third party involved in sacking of employee," he said.

"If he wins the case against the employer or any third party he will have a very substantial damages claim. He was on a very high income and may not be able to earn anything like that for foreseeable future. It's high stakes indeed."

But while this might be a goal for Folau, it was no home run, he said.

"You would need credible evidence of the involvement by the sponsor," Mr Bornstein said.

That was echoed by Mr Marouchak, who said it wasn't clear RA's sponsors had done enough to be directly implicated in his sacking.

For a start, Folau has to persuade a court his dismissal was due to his religion.

"If that happens, the extent of Qantas's involvement in the sacking will be examined, such as what discussions were had between RA and Qantas before Folau's sacking," Mr Marouchak said.

"Qantas would defend themselves by explaining they either had nothing to do with RA's decision to sack Folau or if they were part of it somehow, it had nothing to do with Folau's religion."