diff --git a/erpnext/setup/doctype/employee/employee.json b/erpnext/setup/doctype/employee/employee.json
index 6552e91621f..fd9b5e26c3d 100644
--- a/erpnext/setup/doctype/employee/employee.json
+++ b/erpnext/setup/doctype/employee/employee.json
@@ -460,7 +460,6 @@
    "fieldname": "company_email",
    "fieldtype": "Data",
    "label": "Company Email",
-   "mandatory_depends_on": "create_user_automatically",
    "oldfieldname": "company_email",
    "oldfieldtype": "Data",
    "options": "Email"
@@ -834,7 +833,7 @@
  "image_field": "image",
  "is_tree": 1,
  "links": [],
- "modified": "2026-03-23 11:06:35.539765",
+ "modified": "2026-03-23 13:36:13.708549",
  "modified_by": "Administrator",
  "module": "Setup",
  "name": "Employee",
diff --git a/erpnext/setup/doctype/employee/employee.py b/erpnext/setup/doctype/employee/employee.py
index 9cf1ce6aa35..879aa80dd2b 100755
--- a/erpnext/setup/doctype/employee/employee.py
+++ b/erpnext/setup/doctype/employee/employee.py
@@ -126,7 +126,6 @@ class Employee(NestedSet):
 		self.set_employee_name()
 		self.validate_date()
 		self.validate_email()
-		self.validate_auto_user_creation()
 		self.validate_status()
 		self.validate_reports_to()
 		self.set_preferred_email()
@@ -162,8 +161,14 @@ class Employee(NestedSet):
 			self.validate_duplicate_user_id()
 
 	def validate_auto_user_creation(self):
-		if self.create_user_automatically and not self.company_email:
-			frappe.throw(_("Email is mandatory when Create User Automatically is enabled"))
+		if self.create_user_automatically and not (self.prefered_email or self.company_email):
+			frappe.throw(
+				_(
+					"Company Email or Preferred Email is mandatory when 'Create User Automatically' is enabled"
+				),
+				frappe.MandatoryError,
+				title=_("Auto User Creation Error"),
+			)
 
 	def update_nsm_model(self):
 		frappe.utils.nestedset.update_nsm(self)
@@ -176,6 +181,9 @@ class Employee(NestedSet):
 			self.update_user_permissions()
 		self.reset_employee_emails_cache()
 
+	def before_insert(self):
+		self.validate_auto_user_creation()
+
 	def after_insert(self):
 		if not self.create_user_automatically:
 			return
@@ -185,7 +193,7 @@ class Employee(NestedSet):
 
 		create_user(
 			employee=self.name,
-			email=self.company_email,
+			email=self.prefered_email or self.company_email,
 			create_user_permission=self.create_user_permission,
 		)