Uber drivers have won the right to receive workers benefits such as holiday pay and the national living wage, a tribunal ruled.
In a landmark ruling the Central London Employment Tribunal said that Uber drivers are not self-employed but are workers who are entitled basic benefits such as sick pay.
The case was brought by two of the firm's drivers, with backing from the GMB union. Another 17 Uber drivers also have cases pending.
The ruling about employment rights is widely regarded as a test of the UK's gig economy, which has come under fire for allegedly exploiting workers.
Maria Ludkin, GMB Legal director, said: "This loophole that has allowed unscrupulous employers to avoid employment rights, sick pay and minimum wage for their staff and costing the government millions in lost tax revenue will now be closed."
But Uber had argued that one of the main reasons its 40,000 drivers in the UK are attracted to the firm is that they can "become their own boss", and work when they want.
The firm adopts the self-employed driver model in almost 500 cities around the world, allowing it to keep staff costs low compared to the breadth of service it offers.
Jo Bertram, regional general manager of Uber in the UK, said: "Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss.
"The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want. While the decision of this preliminary hearing only affects two people we will be appealing it."