Phillips allegedly turned up drunk to a video analysis session on October 11, leading Bayonne chairman Alain Afflelou to brand the Welshman's behaviour as "treason".
The club are yet to officially confirm their decision to release Phillips, who is planning to take legal action after learning of the news in a French newspaper.
"I am extremely disappointed and frustrated by the decision taken by Aviron Bayonnais Rugby Club to terminate my employment," Phillips said in a statement.
"I was also disappointed by the fact that I officially heard about my dismissal through an interview given in a French newspaper this morning.
"As a result of discussions with my legal team in France I have now instructed them to issue proceedings against Aviron Bayonnais Rugby Club through the French judicial system."
Phillips had been at Bayonne since 2011 having joined from the Ospreys.