Uber now provides an average of more than 5m rides a day, stellar growth for a company that launched its app just five years ago. For many of its customers, the Uber brand is synonymous with a reliable, efficient – and, above all, cheap – way of getting around. But at what cost?

Last week, a legal challenge against Uber began in the UK. The case is being brought by 19 drivers, supported by the GMB union. Uber stands accused of misclassifying its drivers as self-employed, denying them rights they would be entitled to were they employed by the company, such as holiday pay, sick pay and liability insurance. Drivers claim their take-home earnings can be as little as £5.68 an hour, far below the statutory living wage. There are no safe limits on the maximum number of hours a driver can work a week – indeed, Uber has reportedly given drivers earnings forecasts based on 65-hour weeks – and drivers have no rights to paid rest breaks.

The case against Uber symbolises a growing problem in our labour market. The vast majority of workers can take secure employment for granted. But analysis by the Resolution Foundation suggests there is a small but growing group of workers for whom work is becoming increasingly precarious and insecure.

While some workers embrace flexibility, it is clear that some employers are using lawful arrangements, such as self-employment and zero-hours contracts, to exploit people doing work identical to that of permanent employees. Citizens Advice estimates up to 460,000 people are engaged in this way.

A series of Guardian investigations over the last 12 months has revealed the terrible reality of working for an exploitative employer. At Sports Direct, a company that employs many of its workers on zero-hours contracts, reporters found instances of people not being paid the minimum wage, sick children being sent to school because parents feared taking time off work and draconian dismissal policies. The chair of the business and skills select committee has described working practices at Sports Direct as “closer to that of a Victorian workhouse than that of a modern, reputable high street retailer”.

Another Guardian investigation into parcel delivery firm Hermes, which uses thousands of self-employed couriers, found examples of couriers unable to make the recommended living wage from the rates the company pays, afraid to take time off for holiday or sickness for fear of losing rounds if they cannot find cover.

It is utterly shameful to find these working practices in 21st-century Britain. These workers contend not just with a lack of guaranteed stable income and take-home earnings below the minimum wage: they suffer the health consequences of working through illness; accumulate no rights to a private pension; and have difficulties getting a mortgage or a tenancy agreement.

Employment law urgently needs updating to ensure these individuals can enjoy the same rights the majority of employees take for granted. The TUC has proposed several reforms, including giving individuals who work regular hours with the same employer an entitlement to a written contract that guarantees them those hours and putting the onus on employers to convince an employment tribunal that an individual is genuinely self-employed. It should not take newspaper investigations to uncover these working practices: there needs to be much better enforcement of the existing law. But enforcement relies too heavily on individuals bringing cases to employment tribunals and there have been big drops in the number of cases brought since upfront fees were introduced in 2012. There is too little focus on proactive enforcement. In sectors where enforcement agencies exist, resources have been cut in the last few years. In many sectors where bad practice is rife, such as social care and construction, there is no proactive enforcement regime.

Unions also have a critical role to play in representing workers. But membership rates have been in decline for decades, with coverage particularly poor in the low-paid private sector, where we see some of the biggest problems. While organising in more fragmented workplaces is undoubtedly a challenge, unions have been slow to innovate.

Theresa May launched her premiership with an explicit pledge to crack down on irresponsible business practices. Whether or not her government prioritises the modernisation of employment law will be a real test of that commitment.