Judges in Amsterdam said the legal relationship between Uber and its drivers has "all the characteristics of an employment contract".
ADVERTISEMENTUber drivers in the Netherlands are entitled to the same employment benefits as taxi drivers, a court has ruled.
Judges in Amsterdam said drivers working for the ride-hailing app fall under the Dutch taxi drivers’ collective labour agreement.
The court argued the legal relationship between Uber and its drivers "conforms to all the characteristics of an employment contract", and they, therefore, must be employed on a permanent basis.
The Dutch workers’ organisation that brought the case called the decision a major victory for Uber drivers.
"This verdict shows what we have been saying for years," Zakaria Boufangacha, vice-chair of the Federation of Dutch Unions (FNV), said in a statement.
"Uber is an employer and the drivers are employees, so Uber has to abide by the taxi traffic collective labour agreement."
FNV said the ruling means Uber drivers are entitled to more pay and have more rights if they are ill or have their employment terminated.
The court ordered Uber to pay the federation €50,000 in damages for not adhering to the collective labour agreement.
But Uber has said that the decision is a blow to the gig economy model and is likely to appeal the verdict.
"We are disappointed with this decision because we know that the overwhelming majority of drivers wish to remain independent," said Maurits Schönfeld, Uber’s General Manager Northern Europe.
"[The drivers] don’t want to give up their freedom to choose if, when, and where to work," Schönfeld added.
"In the interest of drivers, we will therefore appeal the court’s decision, whilst also continuing to improve platform work in the Netherlands."
An Uber spokesman also said that nothing would change for drivers using the app as the company appeals the ruling. The company has an estimated 4,000 drivers in the Dutch capital city.
The Dutch court decision follows a similar ruling by the UK Supreme Court in February that said Uber drivers are "workers" and not self-employed.
Meanwhile, in Germany, Uber now operates as only an intermediary company follows several legal disputes. German Uber journeys are carried out by car rental companies, where the drivers are mostly permanently employed.