Uber has failed to overturn a landmark legal judgement over drivers’ working rights, in a fresh setback for the company in the UK.

The Employment Appeals Tribunal ruled on Friday that Uber’s drivers qualify as workers, upholding a decision against the ride-hailing app made last year.

It raises the prospect that Uber will have to give its drivers rights such as the minimum wage and holiday pay, a move that the company says could fundamentally damage the way it operates.

The company, which argues that its drivers are self-employed and that it is a mere intermediary between drivers and passengers, has around 50,000 drivers in the UK but its model has been criticised in some quarters.

It had appealed an Employment Tribunal case last year, brought by two former drivers, that ruled that drivers were effectively working for Uber while the app was switched on, and were not able to make themselves available to other operators as Uber claimed.