Israel Folau's unfair dismissal case appears headed for a showdown in the Federal Court, with potentially far-reaching implications for any Australian with an employment contract and a social media account.

Key points: Legal experts expect this to be a "test case" between the rights of employers and employees

Legal experts expect this to be a "test case" between the rights of employers and employees Rugby Australia will need to prove that it did not terminate Folau's contract based on his religious beliefs

Rugby Australia will need to prove that it did not terminate Folau's contract based on his religious beliefs Lawyers for Folau are expected to argue that RA's Code of Conduct does not override the law

The Fair Work Commission has issued what is known as a certificate following an unsuccessful attempt at mediation between Folau and Rugby Australia last month.

Folau's solicitor, Mr George Haros, said "we are now considering our options, which includes the possibility of court action".

It is expected that Folau's team will file a statement of claim in the Federal Court within the next two weeks.

Legal experts are heralding the coming court battle as a "test case" that will set a precedent for what holds sway before the courts — an employer's rights via an employment contract or their employee's freedom of religious expression.

Various legal arguments will be weighed, including those made by a Folau legal team which can draw on a $2 million war chest.

Here is how it may play out.

Legal speak

"Israel Folau will argue that it's all about religious expression and being inhibited on that front, or disproportionately so," said Giuseppe Carabetta, senior lecturer in employment law at Sydney University Business School.

"Rugby Australia will try to rebut the presumption that it is based on religious freedom by arguing that it is a pure breach of their code of conduct."

Rugby Australia says Folau breached the Professional Rugby Players' Code of Conduct. ( AAP: Paul Miller )

The burden of proof in this case will lie with RA to establish that it did not terminate Folau's contract based on his religious beliefs.

RA will rely on its initial charge that Folau was guilty of a high-level breach of the Code of Conduct, which forms a standard part of all its contracts.

The Code says in part players should "treat everyone equally, fairly and with dignity regardless of … sexual orientation … Any form of bullying, harassment or discrimination has no place in Rugby".

The Code also warns players to "not use Social Media as a means to breach any of the expectations and requirements of you as a player contained in this Code".

On the surface is seems cut and dried: RA believed Israel Folau did not treat gay people equally or fairly by stating they would go to hell and he used social media to express that view.

But Josh Bornstein, an employment lawyer with Maurice Blackburn, warned that relying on the Code of Conduct may not sway a Federal Court judge.

Why? Because the Fair Work Act states explicitly that an employer cannot discriminate against an employee, victimise or sack them because of their religion.

Mr Bornstein gives this example: "If you had a contract which said 'I'm going to pay you four dollars an hour,' it would be no defence in an underpayment case under the Fair Work Act to say, 'he agreed to it'."

Put simply, a code of conduct does not override the law.

Possible outcomes and ramifications

Mr Bornstein said RA could use a different strategy for their defence by arguing the Act only protects employees when they are sacked for identifying with a particular religion.

"It would protect any employee who was Hindu in a workplace that said 'we will not tolerate anyone being a Hindu'," he said.

So, how will Folau's team counter?

He will argue that he was unlawfully terminated because of his religion.

Israel Folau is the equal third-highest try scorer in Wallabies history. ( Reuters: Toby Melville )

"Folau will say 'the Act protects me from sacking because of my religion and that protection should extend to expressing my religious beliefs', notwithstanding anything in any contract or any disciplinary process or any social media policy that Rugby Australia or any other employer has," Mr Bornstein said.

What makes this case so interesting — and the reason it will be a test case — is that the issues it raises haven't been fully tested.

"I think Folau's got a respectable argument, but it's not clear-cut," Mr Bornstein said.

"One of the reasons that it's not clear-cut is that there's been very little judicial consideration of this part of the Fair Work Act. Most cases settle.

"If this goes the full distance, it will be the test case. It will set the precedent."

That precedent could also have far-reaching implications because many employees are signing up to a code of conduct.

"If Israel Folau wins it will mean the balance will go to employees, it will mean a narrowing of employment contracts clauses and also codes of conduct," Mr Carabetta said.

And it is not just employees: many university students, for example, have to abide by a code of conduct.

Which is why, no matter which side of the Israel Folau debate you may support, the outcome of the case is one that could affect us all.