Uber, the global alternative taxi company is to pay up to $100m to settle class actions in the States of California and Massachusetts, where thousands of drivers claimed that they should have the rights of company employees rather than independent contractors as Uber sees them

The distinction is critical for both parties, it’s estimated companies such as Uber would save up to 30% in operating costs by not having to provide employee benefits such as health insurance, holiday pay and pension contributions.

Having to classify drivers as employees in certain States or even countries would be a massive blow to the company which relies on non-professional taxi drivers who are hired via its mobile app

Under the deal Uber will pay $84m to the drivers – estimated to number more than 160,000 in California alone - and an additional $16m should it reach certain valuation targets following a stock market flotation.

Uber CEO Travis Kalanick published a blog post announcing the agreement, "We haven’t always done a good job working with drivers," he wrote.

He added, "At our size that’s not good enough. It’s time to change."