In a landmark ruling Friday that could impact Britain's wider "gig" economy, a London employment tribunal ruled that taxi drivers using the Uber ride-hailing app are "workers" and entitled to minimum wage and holiday pay.
The ruling is a major blow to the San Francisco-based company, which argued that it was a technology company that enabled self-employed drivers to connect with passengers through its smartphone app.
The question over whether Uber drivers should be classified as self-employed or as employees has been the subject of legal battles on both sides of the Atlantic.
Uber said Friday it would seek to appeal the judgment, which applies to the two drivers who brought the case to court. But analysts said it could also open the floodgates to claims from other Uber drivers in Britain, as well as the thousands of independent workers in Britain's gig economy, in which temporary positions are the norm and independent workers perform short-term jobs.
"This is a groundbreaking decision," said Nigel Mackay, a lawyer representing the drivers. "It will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled."
He told the BBC that his clients at one point were earning around 5 pounds ($6.10) an hour. In Britain, the minimum wage is 7.20 pounds ($8.78) an hour for anyone older than 25.
Uber has grown rapidly in London since its arrival in 2012 - London is one of the few major cities that doesn't limit the number of cabs - but the company has faced fierce resistance from the city's traditional black cabs.
The Licensed Taxi Drivers Association, a trade body for black cabs, appeared delighted by the ruling. "Uber should now be made to pay minimum wage and stop exploitation of vulnerable workforce!" the association tweeted.
In its judgment, the Central London Employment Tribunal said that Uber drivers should be treated as "workers" and entitled to holidays, rest breaks and the minimum wage. In Britain, there is a difference between a "worker" and an "employee," the latter is entitled to additional rights, including sick pay and protection against unfair dismissal.
The tribunal also said that drivers do not clock in for work the moment someone climbs into their car, but rather when the driver "has the app switched on, is in the territory in which he is licensed to use the app, and is ready and willing to accept trips."
Uber emphasized that the ruling applies only to the two individuals who brought the case.
Jo Bertram, the company's regional general manager in Britain, said: "Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss."
The "vast majority" of the 40,000 drivers in Britain who use the Uber app "want to keep the freedom and flexibility of being able to drive when and where they want," she added. "While the decision of this preliminary hearing only affects two people, we will be appealing it."
The legal case was backed by the GMB trade union, which called Friday's judgment a "monumental victory."
Maria Ludkin, the union's legal director, said in a statement that it was "reviewing similar contracts masquerading as bogus self employment, particularly prevalent in the so called 'gig economy.' This is old fashioned exploitation under newfangled jargon, but the law will force you to pay GMB members what they are rightfully due."