Shocking new videos showing workers being forced to simulate sex acts for not meeting sales targets have emerged as part of a $60 million class action against leading charity fundraiser Appco Group Australia.

Key points: Workers were forced to simulate sexual acts on colleagues at meetings

Workers were forced to simulate sexual acts on colleagues at meetings Lawyers involved in class action against Appco say it's the worst video they've seen in the case

Lawyers involved in class action against Appco say it's the worst video they've seen in the case Appco says it will vigorously defend allegations raised in the class action

Appco hires young sales reps as independent contractors via marketing companies. The workers, known as charity muggers or "chuggers", raise money for some of Australia's biggest charities, as well as big-name companies and utilities including Optus and AGL.

The company is accused of "sham contracting" — hiring workers as independent contractors rather than employees to avoid paying them the minimum wage.

The class action is the biggest of its kind in Australian history.

Lawyers have already signed up 730 claimants around the country who allege they were paid as little as $5 per hour for up to 80 hours per week.

Many also allege they were subjected to bizarre workplace humiliation rituals.

'Pseudo sexual acts'

Many workers allege they were subjected to bizarre workplace humiliation rituals. ( ABC News )

In the latest video, filmed at an Adelaide marketing company engaged by Appco Group Australia, male workers are forced to simulate sexual acts on colleagues who failed to meet their sales targets.

Lead partner at Chamberlains Law Firm, Rory Markham, said it was the worst video he had seen so far.

"The video depicts a series of pseudo sexual acts performed on men by other men in a room's morning meeting which we're instructed was orchestrated by the managing director of that company," Mr Markham said.

The video was filmed in April 2014 at a marketing company called On Demand Sports. It is now known as Visionary Direct Enterprises.

"It's a video that can't be explained in any employment or any business context," Mr Markham said.

"No employer in Australia could get away with that sort of behaviour. It appears to be the relics of a very long lost navy ritual that we don't see in the Australian context any more."

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In another video, a manager at Crossfire Marketing in Brisbane instructs young sales workers how to perform a "slug race".

The video shows the workers laying face down on a meeting room floor and writhing on the ground with their arms behind their backs.

Sorry, this video has expired Appco employees say they were made to do "The Slug Race" when they failed to meet sales targets

Mr Markham said it was another workplace ritual designed to punish and humiliate workers who did not meet their sales targets.

In a statement to the ABC, Appco said that in the past, some of the marketing businesses that sub-contracted its services to Appco may have conducted "motivational games" which, while well-intentioned, crossed the line into improper behaviour.

"Any such activities were conducted without the knowledge, permission or encouragement of Appco Australia," the statement said.

"These activities have now been banned and represent a breach of contract with Appco."

In the class action, due to commence in the Federal Court next month, lawyers will allege Appco used an elaborate and complex model of contracting to defeat basic employment entitlements, while also reaping the benefits and profits of running one of the country's largest marketing enterprises.

Mr Markham said the average age of claimants was 22. They had worked in the business for 44 weeks, 67 hours per week. They earned a total commission of $387 per week but then had to pay work expenses of between $60 and $140 per week.

Injustices 'need to be put right'

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 8 minutes 4 seconds 8 m Former employee turned to 'charity mugging' because 'any work that you find is good work'

In a significant breakthrough for the case, one of the claimants has obtained a ruling from the Fair Work Ombudsman that he was an employee, not an independent contractor.

Tyrone Corbett worked for Appco marketing company QMG in Hobart. He said he was grossly underpaid and witnessed workplace rituals which involved workers being forced to place cigarettes up their backsides and smoke them and lick underpants.

But in a statement to the ABC, Appco Group Australia said the adverse finding related to QMG Marketing in Hobart and was consistent with the fact that Appco did not employ or directly contract workers. It said it would vigorously defend the sham contracting allegations.

"The statement of claim in the class action does not make any allegations of bullying and harassment, despite several months of a bullying-based media campaign designed to attract publicity for the case," the company statement said.

Mr Corbett told the ABC he wanted to see Appco held accountable for the harm done to workers.

"I think that some of the injustices that the leaders knew about and encouraged need to be put right," he said.

"It was one of my good friends … who had to shove the cigarette up his butt. That was not right. He is scarred by that.

"So my main purpose for this is to have some sort of justice for him.

"While the people who perpetrated this may not be held to account, this is some way for them to pay it back."

Tyrone Corbett says he witnessed disturbing workplace punishments. ( Supplied )

Tim Gunstone from the National Union of Workers (NUW) said sham contracting was a big problem in the fundraising sector.

"We see new ones cropping up all the time and where there is no checking that their employment practices are lawful and ethical," he said.

"They continue to employ people in an unlawful and unethical manner."

He said most people would be shocked to learn that between 60 and 90 cents in the dollar collected for charities went directly to the marketing companies.

"The only people winning at the moment is the for-profit companies who are ripping off the workers," Mr Gunstone said.

"They're ripping off charities and they are ripping off donors, the charities are suffering reputational risk, donors are having money not reaching the charity that they believe and the young people doing the work are not getting paid enough."