Uber said it will treat its 70,000 UK drivers as “workers” instead of self-employed contractors for the first time.

The move by the ride hailing app means that drivers will receive a guaranteed minimum wage, holiday pay and pensions.

The news comes after a long-standing legal battle over workers' legal rights, which Uber lost in February.

Though Uber told the BBC that the move will not lead to higher prices for consumers, fares increased after a similar ruling in California.

Worker status, which many casual and agency workers fall under, does not however give all the protections enjoyed by fully fledged employees.

The news means that drivers cannot earn less than the National Living Wage for over-25s, which is £8.72 an hour but is going up to £8.91 next month, regardless of age.

Drivers will also be given a holiday pay top-up of 12.07 per cent of their earnings every fortnight automatically. This is equivalent to the legal minimum holiday entitlement for workers, 28 days a year.

The decision will also provide automatic enrolment for drivers into a pension plan starting from tomorrow, which will see drivers contributing five per cent and the company three per cent.

"Uber is just one part of a larger private-hire industry, so we hope that all other operators will join us in improving the quality of work for these important workers who are an essential part of our everyday lives,” said Jamie Heywood, regional general manager for Northern Europe at Uber. "Drivers have consistently told us that they wanted both the flexibility that we provided but also they wanted the benefits and we've been struggling to find a way of bringing those two together in a way that work for us and work for drivers.”

“This is a significant improvement in the standard of work for UK drivers,” said Uber chief executive Dara Khosrowshahi to the Evening Standard. “But I know many observers won’t pat us on the back for taking this step, which comes after a five-year legal battle.”

“They have a point, though I hope the path that we chose shows our willingness to change.”

He added: “The Supreme Court judgment provides a clearer path forward, so that we can build a model that gives drivers the protections of worker status while continuing to let them work flexibly, in the same way they have been since Uber came to the UK in 2012.”

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