Uber says it will give its 70,000 UK drivers a guaranteed minimum wage, holiday pay and pensions.

The ride-hailing app giant said drivers would earn at least the UK’s National Living Wage, paid to the over-25s, of £8.72 an hour.

It comes one month after the US firm lost a legal battle in the UK, begun in 2016, over drivers’ status.

Uber told the BBC it did not expect the change in drivers’ conditions to mean higher fares.

Union leaders and employment experts said Uber’s move would have far reaching consequences for the gig economy. Bates Wells lawyer Rachel Mathieson, who represented Uber drivers fighting for worker rights, called it “a very significant milestone”.

In last month’s Supreme Court hearing, Uber had argued it was a third-party booking agent, and its drivers were self employed.

But the court ruled its drivers were workers, a category that means they are entitled to minimum legal, holiday and pension rights.

The company is being challenged by its drivers in multiple countries over whether they should be classed as workers or self-employed.

Jamie Heywood, regional general manager for Northern Europe at Uber, said: “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.

“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,” he said.

Uber pointed out in its statement announcing the changes that a worker is a classification that is unique under UK employment law. Workers are not full-blown employees but are entitled to the minimum wage, holiday pay and a pension.

The company said the recent UK Supreme Court ruling had provided a clearer path forward as to a model that gives drivers the rights of worker status – while continuing to let them work flexibly.

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