Uber has lost its latest legal battle after the Supreme Court ruled drivers should be classed as workers, not independent third-party contractors.
Lawyers said the ruling means drivers will be entitled to basic rights, such as paid holiday, and will have significant impact to others working in the gig economy.
Leigh Day, the law firm fighting the case on behalf of the GMB Union, said tens of thousands of drivers could be entitled to an average of £12,000 in compensation.
But Uber said the ruling does not reclassify all UK drivers as workers - just the small group who brought the claim at a 2016 employment tribunal, many of whom no longer drive for the ride-sharing firm.
GMB Union described Friday's win as "historic" and marked "the end of the road for Uber’s mistreatment of drivers".
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."
Nigel Mackay, a partner in the employment team at law firm Leigh Day, said: “Our clients have been fighting for workers’ rights for many years, so we are delighted that the end is finally in sight."
He added: “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."
Mark Cairns, an Uber driver in London for five years, said: “It’s been a long time coming but I’m delighted that we’ve finally got the victory we deserve.
“Being an Uber driver can be stressful. They can ban you from driving for them at the drop of a hat and there’s no appeal process.
“At the very least, we should have the same rights as any other workers and I’m very glad I’m part of the claim.”
Jamie Heywood, Uber's regional manager for northern and eastern Europe, said: "We respect the Court's decision which focused on a small number of drivers.
Average compensation some Uber drivers may be entitled to, says law firm Leigh Day
“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.”
A nationwide consultation with drivers will begin shortly to "help us shape the future of flexible work", Uber said. The outcome of the process will be shared in the coming weeks.
All seven Supreme Court justices unanimously dismissed Uber's appeal on Friday.
One Justice, Lord Leggatt, said in a ruling: “I think it clear that the employment tribunal was entitled to find that the claimant drivers were ‘workers’."
Friday's ruling marks the fourth legal battle which Uber has lost against its drivers.
In October 2016, the Central London Employment Tribunal ruled in GMB's favour.
Uber took their case to the Employment Appeal Tribunal (EAT) in 2017, which also ruled against the ride-sharing company.
Then in 2018, the Court of Appeal judgement became Uber's third legal defeat on this issue.