Uber will guarantee its drivers in the UK a minimum hourly wage, holiday pay, and a pension.
According to The Guardian, the move comes after the British supreme court ruled in February that the ride-hailing app would have to treat its drivers as workers rather than self-employed "partners".
The American firm has over 70,000 drivers in the UK and the changes will take affect almost instantly — from Mar. 17 onwards.
The BBC reported that Uber does not expect the changes to increase the price of rides for users.
Under the new arrangement, drivers will earn the minimum hourly wage of £8.72 (S$16.31) an hour, calculated from the time they accept a trip till the time the drop the passenger off.
It will be instituted as an earnings floor, and not an earnings ceiling.
Drivers will also be paid holiday time based on 12.07 per cent of their earnings and be automatically enrolled to a pension plan contributed to by Uber and the driver.
They will continue to receive free insurance in case of sickness or injury as well as parental payments, a policy that has been in place since 2018.
February's supreme court ruling was the conclusion of a long-running legal battle, which saw Uber lose three earlier rounds, according to BBC.
The ruling stated that Uber had to consider its drivers as "workers" from the time they logged onto the app, until they logged off.
It is likely to have deeper ramifications within the gig-economy.
"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, Uber’s regional general manager for northern and eastern Europe reported The Guardian.
Uber is also facing other challenges from its drivers in other countries on whether they should be classed as workers or self-employed.
Top image from Charles Delvuvio