A workplace dispute is unfolding after budget cuts led to the sacking of a senior public servant in South Australia.

The Supreme Court will now hear the case of David Litchfield, who claims to be owed a $174,000 termination payment after being dumped from his contract as an executive director in the Department of Manufacturing, Innovation, Trade, Resources and Energy.

Mr Litchfield had signed a contract extending to June 2012, but had his position abruptly abolished with funding cuts in the 2010 budget. He was able to continue working on short-term assignments for the department, and took another public service position in June 2011.

He had been awarded a termination payout in the South Australian Industrial Relations Court, but that was overturned on appeal.

The Full Court of the Industrial Court said the Government could re-assign employees within agencies as needed, but now Mr Litchfield seeks to appeal to the Full Court of the Supreme Court.

Reports indicate the Court has ruled issues raised about the contract and the Public Sector Act are of general importance, and will be followed through.

There has been no date set for the appeal.