Two Uber drivers have won the right to be classed as workers rather than self-employed, a London employment tribunal ruled.

This means drivers for the ride-hailing app will be entitled to holiday pay, paid rest breaks and the national minimum wage.

The GMB union, who brought the case and supported the drivers, described the decision as a “monumental victory” for some 40,000 drivers in England and Wales. Uber said it would appeal against the ruling that it had acted unlawfully. The San Francisco-based company had argued that its drivers were not employees but self-employed contractors. And that it provided a chance to make a living for tens of thousands of people.

The ruling accused Uber of “resorting in its documentation to fictions, twisted language and even brand new terminology”, adding: “The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our mind faintly ridiculous.”

“This is a monumental victory that will have a hugely positive impact on drivers,” said Maria Ludkin, legal director at the GMB union, which brought the case in July. The TUC said the case had exposed the “dark side” of the UK’s labour market. General secretary Frances O’Grady said: “For many workers the gig economy is a rigged economy, where bosses can get out of paying the minimum wage and providing basics like paid holidays and rest breaks.”

“What is happening at Uber is just the tip of the iceberg. Lots of people are now trapped in insecure jobs, with low pay and no voice at work. We need the government to get tough on sham self-employment.”

• Uber lost the first round of a landmark employment case.