Uber drivers are employees rather than independent contractors and are entitled to greater workers' rights, a Dutch court ruled on Monday.
It is the latest court victory for unions fighting for the rights of workers in the gig economy after a similar decision in Britain.
The Amsterdam District Court sided with the Federation of Dutch Trade Unions, which had argued that Uber drivers are in fact employees of a taxi company and should be granted the same pay and benefits as other workers in the sector.
Uber said it will appeal against the decision and "has no plans to employ drivers in the Netherlands".
"We are disappointed with this decision because we know that the overwhelming majority of drivers wish to remain independent," Maurits Schönfeld, Uber's general manager for northern Europe said. "Drivers don't want to give up their freedom to choose if, when and where to work."
The court found that drivers who transport passengers via the Uber app are covered by the collective labour agreement for taxi transportation.
"The legal relationship between Uber and these drivers meets all the characteristics of an employment contract," the ruling said.
The FNV hailed the ruling as "a huge victory for drivers" who it said will gain more pay and benefits.
"Due to the judge's ruling, the Uber drivers are now automatically employed by Uber," said Zakaria Boufangacha, FNV's deputy chairman. "As a result, they will receive more wages and more rights in the event of dismissal or illness, for example."
Uber drivers are in some cases entitled to back pay, the court said.
The judges also ordered Uber to pay a fine of 50,000 euros ($58,940) for failing to implement the terms of the labour agreement for taxi drivers.
In March Uber said it will improve workers' rights, including the minimum wage, for all of its more than 70,000 British drivers after it lost a Supreme Court case in February.
($1 = 0.8483 euros)