Test your code before posting it!

try:

CREATE TABLE #Test

(

EmployeeID Int,

LogTime DateTime

)

INSERT INTO #Test

select 1001, '01/01/2010 10:22:36'

union select 1002, '01/01/2010 10:24:37'

union select 1003, '01/01/2010 10:24:38'

union select 1001, '01/01/2010 10:24:39'

union select 1001, '01/01/2010 10:24:40'

union select 1002, '01/01/2010 10:24:45'

union select 1003, '01/01/2010 10:26:45'

--drop table #qupd

select EmployeeID, LogTime, cast(Null as datetime) as PrevLogTime, cast(null as int) as TimeDiff

into #qupd

from #Test

create clustered index cix_qupd on #qupd(EmployeeID, LogTime)

declare @PrevLogTime datetime

declare @TimeDiff int

declare @EmployeeId int

update #qupd set

@PrevLogTime = PrevLogTime = CASE WHEN (EmployeeID = @EmployeeId) THEN @PrevLogTime ELSE NULL END

,@TimeDiff = TimeDiff = DATEDIFF(minute, @PrevLogTime, LogTime)

,@EmployeeId = EmployeeID

,@PrevLogTime = LogTime

option (maxdop 1)

select EmployeeID, LogTime

from #qupd

where PrevLogTime is null or TimeDiff > 1

Please note: you have entries in your sample data for EmployeeID 1001 whcih are more than 1 minute appart, so you should expect them to be shown in results.