The former Blues State of Origin weapon was twice pulled over in western NSW, which resulted in him copping a $50,000 fine and being removed from the NRL's bubble.
The Sharks had already relocated to Queensland, but Dugan was forced out of the NRL's bubble in NSW.
Police first stopped Dugan and his friend in Lithgow just before midnight on Friday, August 20, about 150 kilometres away from Dugan's Sydney home, and they were ordered to return.
But they were again stopped about 40 minutes later while travelling toward Yetholme.
Dugan and his friend told police they had left Sydney to feed animals.
The Sharks this afternoon released a statement confirming they had terminated Dugan's contract.
"The decision was made after a review and internal hearing process, with the club and Josh's management mutually agreeing to the immediate termination," the statement reads.
In Dugan's first breach of COVID-19 protocols, the former Dragon and Raider attended a restaurant in Sydney's Potts Point, despite not being allowed to attend any hospitality venue under the NRL's stage-four protocols.
The NRL slapped the 31-year-old with a $25,000 fine.
Dugan, who had been contracted to the Sharks until the end of October, has now been sacked by two of the three NRL clubs that have signed him.
Dugan has played 215 NRL games since making his debut with the Raiders in 2009.
Canberra tore up Dugan's contract in 2013 following a drinking session on a roof with Blake Ferguson.
After playing 70 games with the Raiders, Dugan ran out for the Dragons on 84 occasions between 2013 and 2017.
The former Test Kangaroo then played 61 games for the Sharks between 2018 and 2021.