Sauber have stated that the decision to terminate the contract of Giedo van der Garde was taken to protect the jobs of 330 employees.
Reports on Wednesday surfaced that Dutchman Van der Garde had opened proceedings against the Formula One team, claiming Sauber had reneged on a deal to allow him to race in the 2015 season.
The financially stricken constructor instead opted to hand seats for the upcoming season to Marcus Ericsson and Felipe Nasr.
Van der Garde is hoping that an Australian court will overturn the decision, though, and that he will take to the grid for the opening race in Melbourne.
However, Sauber insist that his dismissal was to protect the good of the team.
"We are in an ongoing process with Giedo van der Garde," a Sauber spokesman confirmed to Swiss newspaper Blick.
"We have terminated his contract, but we had good reason.
"We made our decision in the interest of the team and its 330 employees."