Resolution

The Action Flag column needs to be added to the Custom Template:

Go to Payroll>Employee Maintenance>Employee Import
Click Custom Templates in the toolbar. Select applicable Import type Radio Button. Click Ok.
Locate the Template being used and click View.
Click Continue.
Select the Applicable drop down arrow and click on Action Flag. Click Save. Click Return.
Add a new column to the import file, titled Action Flag.
1. The values for the Action Flag are either A - Add, U - Update, D - Delete. This needs to be defined in the import file on each line.
2. The Import file can also be used to create the Template if needed. (See document link in Additional Information)

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