The decision means Uber drivers will be entitled to basic employment protections, including a minimum wage, breaks, and holiday pay.

As third-party contractors or freelancers, drivers have not enjoyed these employment benefits while working for Uber so far.

The Supreme Court ruling marks the end of a four-year legal battle and was described by union GMB as “historic”.

Lawyers Leigh Day, fighting the case on behalf of GMB, say tens of thousands of Uber drivers could be entitled to an average of £12,000 each in compensation.

In October 2016, the Central London Employment Tribunal ruled in GMB’s favour. But instead of accepting the judgement of the courts, Uber took its case to the Employment Appeal Tribunal in 2017, which also ruled against the ride-sharing company.

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Then in 2018, the Court of Appeal judgement became Uber’s third legal defeat on the issue.

The Supreme Court victory is likely to have huge ramifications for other gig economy firms.

GMB will now consult with Uber driver members over their forthcoming compensation claim at the Employment Appeal Tribunal.

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. GMB will now consult with our Uber driver members over their forthcoming compensation claim.”

Gig economy workers tend to work for one or more firms on a job-by-job basis. Businesses claim the business model is “flexible”, but unions argue it is exploitative.

Kate Smith, head of pensions at Aegon, said: “Today’s Supreme Court judgement that Uber drivers are ‘workers’ rather than self-employed could have ripple effects for all gig workers, giving them not only rights to holiday pay, but potentially other workplace benefits such as employer pension contributions.

“In the UK pension provision is largely delivered through the workplace, and the self-employed, including gig workers, are excluded from the government’s flagship auto-enrolment policy. This reclassification is another step towards opening the doors to auto-enrolment for all gig workers, giving them the opportunity to save for retirement, with the important boost of the right to a 3% employer pension contribution.”