Rangers Football Club is coming under increasing pressure to settle a dispute with 20 former employees who are suing over redundancy packages that were offered when the Ibrox club sold its merchandise division for £48 million two years ago.

The controversy, which is due to come before a Glasgow employment tribunal next month, stems from a deal that Rangers concluded in March 2006 with the sports retail giant JJB Sports, which resulted in nearly 200 club employees losing their jobs.

In the JJB deal Rangers received an upfront payment of £18 million, with JJB promising to pay the club £3 million per annum for a further ten years. In return JJB was handed the right to design, manufacture and retail the Rangers replica strip to football fans from its 400-plus shops all over Britain.

Rangers had previously done their replica kit operation themselves, but had financial difficulties at the time and were seeking significant new revenue streams.

The JJB deal, which was brokered by Sir David Murray, the Rangers chairman, and Martin Bain, the club's chief executive, was controversial because it meant the closing down of 18 Rangers shops, most of them based in the West of Scotland. Almost all of the 200 employees who were affected were made redundant, and 20 of them decided to pursue Rangers over a breach of redundancy regulations.

In a separate but related case, JJB previously agreed compensation with ten people.

Rangers now face a tribunal over their 20 former employees' claims next month, and are coming under pressure to settle the case before it goes to a hearing.

The arguments rest on the critical months leading up to the JJB deal in March 2006, and how much information Rangers were prepared to share with their employees as the deal was about to be struck. Under employment law, Rangers were due to provide early consultation with their staff about collective redundancies.

At the time, Rangers shops were abruptly “slowed down” in terms of their operations, and were then shut down when JJB took over. The deal resulted in the 200 employees being offered statutory redundancy deals, which one of them described yesterday as “derisory”.

Speaking to The Times, but not wishing to be named, the former Rangers employee said: “It was totally insulting, what happened to us. I'm a huge Rangers fan, I'd worked for the club for many years, and I was astounded by the way the JJB deal was handled by the club.

“Like others, I felt angry at the way Rangers treated those of us who had helped to make their retail arm such a success.

“We felt we had made a major contribution to building up that business, so much so that Rangers were able to sell it in a deal worth around £48 million. The club then turned round and offered us a redundancy deal which was derisory. It was an insult, a slap in the face for people who had worked hard for Rangers and who loved the club. We felt angry at the way we were treated, which is why we are pursuing this case.”

The timing of next month's tribunal could not be worse for Rangers, who are facing problems on several fronts. The club was knocked out of the Champions League pre-qualifiers by FBK Kaunas last week, costing £10 million in lost revenue, and has just been forced to sell Carlos Cuellar, one of its best players, to Aston Villa.

There is also mounting pressure on Sir David to sell his 90 per cent stake in the club.

Yesterday, coming under increasing criticism, Sir David openly urged people to “put their money where their mouth is” in terms of potential new owners of Rangers.

The 20 former Rangers employees who are suing the club are represented by the GMB in Scotland.

Alex McLuckie, the GMB's senior regional organiser, said yesterday: “We have supported our members throughout in this longstanding legal battle. It is the view of the GMB that the club owners broke collective redundancy laws by deliberately keeping our members in the dark about a deal which they knew would result in job losses for some 200 club employees - many of whom had given years of devoted service and were an integral part of making the merchandise division the success it was when it was licensed off to JJB in 2006.”

Rangers, who are preparing their own defence for the tribunal, last night refused to comment on the case.

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