The owner of a marketing firm at the centre of an alleged bullying scandal has stood down from his job, as fundraising giant Appco launches an urgent investigation into the treatment of donation-collectors.

Appco has ordered all of its 64 other marketing agencies to turn over any details of “suspected or known” bullying and harassment, and provide written assurances that they are not tolerating such behaviour.

A group of former Appco workers have mobilised to join a class action, alleging sham contracting, underpayment and humiliating rituals.

Appco chief executive Martin Gaffney said agencies that could not give this assurance would risk losing their business with Appco.

“We will not tolerate, condone or turn a blind eye to the type of behaviour alleged,” he said.

The move comes amid the fallout from explosive allegations that workers sent to rattle collection tins in public places were wrongly classed and paid as contractors instead of employees. It is also alleged workers were subjected to bullying and humiliation rituals if they “underperformed”.

Legal firm Chamberlains is leading a class action against Appco, aiming to recoup lost wages and damages for up to 8000 former fundraising workers, although Appco is yet to be served with the lawsuit.

Many of the nation’s biggest charities use Appco as a third-party fundraiser, but several well-known organisations are now reviewing their contracts in light of the allegations.

Mr Gaffney said Appco had engaged a top-tier law firm, Baker and McKenzie, to carry out an investigation into the bullying and harassment claims.  Those who don’t hit target risked being placed in a ‘sluggie race’.  Photo: Supplied

Former staff claim they were made to dress up like chickens and fight each other, while others said they had to slither on the floor in a “sluggie race” in front of their colleagues.

The Canberra-based marketing agency where the alleged practices took place has voluntarily agreed to step aside while the inquiry takes place. Jacob Bywater who is a former employee of Appco is leading a class action against the company over the below the mimimum wage.  Photo: Steven Siewert

Mr Gaffney said he did not believe improper practices were “widespread or systemic”.

But the law firm launching the class action, Chamberlains, says its evidence suggests “there has been systemic abuse of team members throughout Australia and not isolated to one marketing company.”

Our business is built on an entrepreneurial philosophy which allows individuals to build their own businesses. Chief executive Martin Gaffney

It says the central issue remains that there has been sham contracting and other measures taken to underpay team members.

The firm has also been engaged by Appco to investigate allegations of the wrongly engaging workers as contractors, a practice known as “sham contracting”.

“We have nothing to hide,” Mr Gaffney said. “There is no way we will tolerate bullying or harassment or any behaviour that breaches employment law.”

Appco on Friday launched its strongest defence yet of its independent contracting model, which it said was regularly scrutinised through independent legal reviews.

Mr Gaffney said there had never been an adverse finding against the company by the Fair Work Ombudsman, the Fair Work Commission or other regulators, and had not previously heard of allegations contained in the looming lawsuit.

“Our business is built on an entrepreneurial philosophy which allows individuals to build their own businesses,” Mr Gaffney said.

Appco claims to reach 50,000 people face-to-face every day and to have raised $800 million in Australia for key charities and sporting bodies.

Appco’s current and former clients include some of Australia’s most high-profile and respected charities, such as Starlight Children’s Foundation, Camp Quality and the National Breast Cancer Foundation.

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