diff --git a/src/vs/base/common/labels.ts b/src/vs/base/common/labels.ts
index 1a9cb36b9a3f..e869e52c6a3a 100644
--- a/src/vs/base/common/labels.ts
+++ b/src/vs/base/common/labels.ts
@@ -78,8 +78,23 @@ export function getPathLabel(resource: URI, formatting: IPathLabelFormatting): s
 		}
 	}
 
+	// we need to get at the file path of the resource but in a way
+	// that preserves platform separators. By default, `URI.fsPath`
+	// will convert separators without allowing to control this from
+	// the outside. But we cannot just use `URI.path` because that
+	// might miss a authority that can be present.
+	// As such our strategy is to:
+	// - use `fsPath` to preserve authority
+	// - convert separators based on OS accordingly
+	let path = resource.fsPath;
+	if (os === OperatingSystem.Windows) {
+		path = path.replace(/\//g, '\\');
+	} else {
+		path = path.replace(/\\/g, '/');
+	}
+
 	// normalize
-	let res = pathLib.normalize(resource.fsPath);
+	let res = pathLib.normalize(path);
 
 	// Windows: normalize drive letter
 	res = normalizeDriveLetter(res, os === OperatingSystem.Windows);
diff --git a/src/vs/workbench/services/label/common/labelService.ts b/src/vs/workbench/services/label/common/labelService.ts
index 3c93b022ec5a..bb2c13070815 100644
--- a/src/vs/workbench/services/label/common/labelService.ts
+++ b/src/vs/workbench/services/label/common/labelService.ts
@@ -177,10 +177,11 @@ export class LabelService extends Disposable implements ILabelService {
 		if (!formatting) {
 
 			// Without a formatter we have to fallback to figuring out what the
-			// label could be given the environment. For that we convert the
-			// given resource to the default scheme and remote authority that
-			// is present in an attempt to e.g. resolve a proper relative path
-			// if that is needed.
+			// label could be that best matches the environment and workspace
+			// the user is in.
+			// As such, we convert the given resource to the default scheme and
+			// remote authority that is present in an attempt to e.g. resolve a
+			// proper relative path if that is needed.
 
 			const defaultResource = toLocalResource(resource, this.environmentService.remoteAuthority, this.pathService.defaultUriScheme);