A class action against leading fundraising company Appco Group Australia, over the alleged exploitation of so-called "charity muggers", will proceed, a court has ruled.

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

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

More than 1,400 claimants around the country allege they were paid as little as $5 per hour for up to 80 hours per week.

Lead claimant Jacob Bywater alleges Appco breached the Fair Work Act 2009 by failing to pay him and other group members ordinary rates of pay and overtime, termination payments, superannuation, allowances and expenses.

Many also alleged they were subjected to bizarre and humiliating workplace rituals.

As the ABC's 7.30 report revealed exclusively in February last year workers were forced to participate in these rituals, which included simulating sexual acts on colleagues who failed to meet their sales targets.

Another video shows young sales workers being forced to perform a "slug race", where workers lay face down on a meeting room floor and writhe on the ground with their arms behind their backs.

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'

The action was filed in the Federal Court of Australia in late 2016. Appco applied for a declaration that the claim was not properly commenced as a class action and that each claim should be heard in separate trials.

Today, Federal Court Justice Wigney dismissed that application.

Justice Wigney ruled Appco had also failed to demonstrate it was in the interests of justice for the class action not to proceed because it would not be an "efficient and effective means of dealing with the claims".

The hearing will proceed on a date to be fixed.

Appco has not filed a defence but said that it would vigorously defend the sham contracting allegations.

"Appco Australia is disappointed that the case is continuing as a class action," said Appco Australia chief executive Perveen Virdee.

"We are entirely confident that we and our sub-contracted marketing companies operate responsible and compliant businesses and we will continue to vigorously defend ourselves in this case.

The company also 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 company statement said.

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