Uber lost an appeal on Friday to overturn a decision by a tribunal which said its drivers deserved workers' rights such as the minimum wage, in a blow to the taxi app as it also battles to keep its licence in London.
Uber's case was rejected at the Employment Appeal Tribunal (EAT) in central London.
The U.S. ride-hailing service has faced regulatory and legal setbacks around the world amid opposition from traditional taxi services and concern among some regulators. It has been forced to quit several countries, such as Denmark and Hungary.
Last year, two drivers successfully argued at a tribunal that Uber exerted significant control over them to provide an on-demand taxi service and should grant them workers' rights such as holiday entitlement and rest breaks.
The decision will not automatically apply to the app's 50,000 drivers in Britain, but is likely to prompt further claims.
Uber is likely to challenge the decision at the Court of Appeal or seek the right to go straight to the Supreme Court.
Uber says its drivers enjoy the flexibility of their work and are self-employed, entitling them in British law to only basic entitlements such as health and safety.
The firm argued in September that its drivers operate in the same way as minicabs, or private hire vehicles, which sprung up in Britain more than 50 years ago.
The verdict could benefit workers at thousands of companies including firms in the "gig economy", where individuals work for multiple employers day-to-day without a fixed contract, such as food courier Deliveroo.
The Silicon Valley firm, which is valued at around $70 billion with backers including Goldman Sachs and BlackRock, will be back in court on Dec. 11 to appeal a decision by London's transport regulator to strip the app of its licence.
Transport for London shocked Uber in September by deeming it unfit to run a taxi service and refusing to renew its licence, citing the firm's approach to reporting serious criminal offences and background checks on drivers.
Uber's 40,000 drivers in the British capital can continue to take rides there until an appeals process is exhausted, which could take months or years.