Israel Folau's brother has quit the NSW Waratahs - on the same day as lawyers for the sacked Wallabies superstar lodged an unfair dismissal claim against Rugby Australia.

NSW coach Daryl Gibson on Thursday said 24-year-old John Folau had been grappling with "divided loyalties" before being granted a release.

The ordeal of seeing his brother have his multi-million-dollar contract with RA and the Waratahs torn up for expressing his controversial religious beliefs on social media appears to have taken its toll on the young backline utility.

"We gave John some time off for leave and he has come back to us recently and asked for a release, which we're happy to grant," Gibson said.

"John has been in a difficult position for the last wee while. He has got really divided loyalties to his family and his brother and then also to the team.

"He wanted to stress how much he enjoyed being with the team and what a difficult decision it was for him."

The 24-year-old former Parramatta NRL player did not play a match for the Waratahs, being named on the bench but not getting on against the Sunwolves earlier this season.

That was as close as he came to making his Super Rugby debut after playing three first-grade games for the Eels during a three-year stint from 2015-17.

Israel Folau has opted to take his sacking to the courts amid reports he is also trying to resurrect his NRL career.

The dual international and Super Rugby's all-time leading tryscorer opted against appealing his "high-level" breach of RA's code of conduct, saying he had lost faith in the governing body's ability to treat him fairly and lawfully.

Just as Israel's future in the game remains uncertain, Gibson said he was not sure whether John Folau would ever play rugby again.

"We can all understand the loyalty he has to his family and to his brother and totally respect that position," Gibson said, while declining to speculate on whether or not John's decision to walk away from rugby was an act of solidarity with Israel.