Collingwood Football Club and the club's previous head of First Nations strategy have settled a lawsuit filed by the former employee, who accused chief executive Craig Kelly of multiple alleged racial incidents.

On Monday, Collingwood and Mark Cleaver released a short joint statement confirming the parties have settled the wrongful dismissal claim outside of court, per reports.

The lawsuit was filed for an application against Cleaver's dismissal.

Collingwood had denied broader allegations made against Kelly.

"Mark Cleaver and the Collingwood Football Club announce that the legal proceedings have been resolved," Monday's statement read, per reports.

"It is requested that Mark's privacy be respected and the parties have agreed not to make any further statements."

Further details of the settlement have not been revealed.

In court documents filed by Cleaver, a Palawa person, in July, it was alleged Kelly had made multiple remarks in relation to Indigenous culture as well as physical matters.

Cleaver is understood to have claimed suffering "hurt, humiliation and distress and economic loss" and was seeking financial compensation after dismissal from the role at the club in May.

It prompted First Nations support service Dardi Munwurro, who were allegedly owed $500,000 by the Pies, to cut ties with the club.

Collingwood had defended Kelly and denied the allegations, calling them "objectionable, irrelevant, vague (and) embarrassing".