The victory, described by a union as “historic”, will have ramifications for other firms, such as Deliveroo, lawyers believe.
Uber has lost its battle in the Supreme Court over drivers’ rights – a decision that could have far-reaching implications for millions of people in the gig economy.
Following a lengthy legal fight, the UK’s highest court ruled against the taxi hailing app firm and concluded drivers should be classed as workers, not independent third-party contractors, which means they are entitled to basic employment protections, including minimum wage and holiday pay.
The victory, described by the GMB union as “historic”, paves the way for drivers to claim compensation running into thousands of pounds, although it could take months for the details to be worked out.
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However, the company, following the court defeat, has signalled it will argue the ruling only applies to a small group of drivers.
Lawyers also believe the ruling will have future ramifications for other firms that use a similar business model, including food delivery firm Deliveroo and taxi rival Addison Lee.
The gig economy, where people tend to work for one or more companies on a job-by-job basis, has faced criticism from unions who argue it is exploitative, while businesses highlight the flexibility as an advantage.
But this was dismissed unanimously by seven justices, including Lord Leggatt, who ruled an original employment tribunal was “entitled to find that the claimant drivers were ‘workers’.”
“Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom.
“The reality has been illegally low pay, dangerously long hours and intense digital surveillance.”
Nigel Mackay, a partner in the employment team at law firm Leigh Day, which represented some of the Uber drivers involved in the case, said: “Already an employment tribunal, the Employment Appeal Tribunal and the Court of Appeal have ruled that Uber drivers are entitled to workers’ rights, and now the Supreme Court has come to the same conclusion.
“Uber has consistently suggested that the rulings only affect two drivers, but Leigh Day will be claiming compensation on behalf of the thousands of drivers who have joined its claim.
“For many of the drivers that Leigh Day represents, the claims could be worth thousands of pounds in compensation.”
Mick Rix, GMB national officer, said: “This has been a gruelling four-year legal battle for our members – but it’s ended in a historic win.
“The Supreme Court has upheld the decision of three previous courts, backing up what GMB has said all along; Uber drivers are workers and entitled to breaks, holiday pay and minimum wage.
“Uber must now stop wasting time and money pursuing lost legal causes and do what’s right by the drivers who prop up its empire.”
Responding to the judgment, Uber’s Jamie Heywood said: “We respect the court’s decision which focussed on a small number of drivers who used the Uber app in 2016.
“Since then we have made some significant changes to our business, guided by drivers every step of the way.
“These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury.
“We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”