Paul, capped six times by England, has been given a final written warning and fined three weeks' wages after missing training sessions on three successive days earlier this month.
The former Wigan and Bradford Bulls rugby league player was summoned to attend a full disciplinary hearing at Kingsholm.
And Gloucester head coach Dean Ryan warned that Paul still had "an enormous amount of work to do to erase the damage".
Ryan added that 30-year-old Paul had received "the maximum penalty available to the club".
It is understood he initially failed to attend a compulsory squad recovery session the morning after Gloucester's Guinness Premiership defeat against west country rivals Bath.
As a result of that no-show, both centre Paul and scrum-half Peter Richards were omitted from Gloucester's squad for the European Challenge Cup opener in Bayonne last Saturday.
Richards, who is in England's 30-man squad for the autumn Tests, has been reinstated for the Challenge Cup clash against Kingsholm visitors Bucuresti.
But Paul remains on the outside after missing training on October 16, 17 and 18 and Gloucester will be making no further comment about his situation.
Ryan has opted for a centre pairing of Mike Tindall and James Simpson-Daniel, but Tindall is set to be on England duty for most of November, a critical period when Gloucester face Premiership games against Leicester, London Irish and Saracens.
New Zealand-born Paul joined Gloucester in a lucrative high-profile switch from the league code four years ago, and has subsequently amassed more than 700 points in just under 100 appearances.
He made his England debut as a replacement - for Tindall - against France in Paris during the 2002 Six Nations campaign, but had to wait almost two years before Sir Clive Woodward called on him again.
Paul returned for the 2004 Six Nations - he was on the bench against Italy and Scotland - and then started all three autumn Tests against Canada, South Africa and Australia later that year after Andy Robinson replaced Woodward as head coach.
Paul was hauled off early during the Wallabies defeat though, and although he featured in England's match-day 22 against France eight months ago, he was not required off the bench.