This error occurs when the employee has an account in another domain. This error is also reported when a user with the same email address exists in in any one of our data centers. 

All active user email addresses need to be unique. Check if the employee has an account in other domains such as .in, .eu, .cn or .com. Once they delete the account belonging to a different region, you will now be able to add them as a user.

To prevent any possible data loss, write to support@zohopeople.com to check if the user has accounts in other Zoho services before deleting.