Continuous casting is the most common method for producing steel into semi-finished shapes like billets or slabs. Throughout this process, steel experiences mechanical and thermal stresses, which influence its mechanical properties. During continuous casting, decreased formability in steel components leads to crack formation and failure. One reason for this phenomenon is the appearance of the soft ferrite phase during cooling. However, it is unclear under which conditions this ferrite is detrimental to the formability. In the present research, we investigated what microstructural changes decrease the formability of microalloyed steels during continuous casting. We studied the hot compression behaviour of microalloyed steel over temperatures ranging from 650 °C to 1100 °C and strain rates of 0.1 s-1 to 0.001 s-1 using a Gleeble 3800® device. We examined microstructural changes at various deformation conditions using microscopy. Furthermore, we implemented a physically-based model to describe the deformation of austenite and ferrite. The model describes the work hardening and dynamic restoration mechanisms, i.e., discontinuous dynamic recrystallisation (dDRX) in austenite and dynamic recovery (DRV) in ferrite and austenite. The model considers the stress, strain, and strain rate distribution between phases by describing the dynamic phase transformation during the deformation in iso-work conditions. Increasing the strain rate below the transformation temperature improves hot ductility by reducing DRV and strain concentration in ferrite. Due to limited grain boundary sliding, the hot ductility improves at lower temperatures (<750 °C). In the single-phase domain, DRX improves the hot ductility provided that fracture occurs at strains in which DRX advances. However, at very low strain rates, the ductility decreases due to prolonged time for grain boundary sliding and crack propagation.