Uber has agreed to give its UK drivers minimum wage, holiday pay and pensions following a Supreme Court defeat last month.
The ride-hailing firm said that drivers would be at least 15 per cent better off under the new regime if they opt in to the pension plan.
The move has been hailed by unions who believe the ruling could “open the door” for better conditions for other gig economy workers.
Speaking to the PA news agency, Mick Rix, national officer of the GMB union, said: “Uber’s announcement should mark the end of the road for bogus self-employment.
“GMB’s battle with Uber now opens the door for workers, and their unions, to win the fight for better pay and conditions at companies across the gig economy.”
TUC general secretary Frances O’Grady said that Uber’s decision was the result of years of campaigning from unions, adding that he would be “pushing hard” to Uber and firms to recognise unions.
“Gig workers deserve the same basic rights as everybody else,” he said. “Unions won’t rest until pay and conditions have improved across the gig economy. And we’ll keep the pressure up on the government to use its long-delayed employment bill to crack down on insecure work.”
Despite the new rules, Uber will only pay drivers the minimum wage when they are actively transporting passengers, not during the downtimes where they are waiting for jobs to come through.
James Farrar and Yaseen Aslam, the two lead drivers in the 2016 employment tribunal case that ultimately led to this ruling, criticised this decision from Uber.
“Uber drivers will be still short-changed to the tune of 40-50 per cent,” they said in a statement released by the App Drivers & Couriers Union.
“Also, it is not acceptable for Uber to unilaterally decide the driver expense base in calculating minimum wage.”
According to several US studies, Uber drivers spend as much as a third of their time waiting for jobs.
Last year, France’s top court deemed that Uber drivers should be considered employees rather than workers, and EU regulators are also considering new rules to protect gig economy workers.
Uber’s Northern and Eastern Europe boss Jamie Heywood said their plan gave drivers what they wanted.
“If we decided that logged-on time on the app was also working time, that would mean that we would need to introduce shifts telling drivers when they can work, which most drivers don’t want to do, and we’d also need to introduce exclusivity terms,” he told Sky News.
Uber sold its autonomous driving unit to start-up Aurora in December after investors called on the loss-making firm to make efforts to turn a profit.