The company manual specifically outlines rules

The company manual specifically outlines rules for employees about contacting
managers while they are out of the office on vacation or for personal reasons.

(A) for employees about contacting managers while they are out of the
office on vacation or for personal reasons
(B) for employees about contacting their managers out of the office on
vacation or for personal reasons (can be any manager not specifically their manager)
(C) for employees about contacting managers who are out of the office on
vacation or for personal reasons (best choice)
(D) for employees about contacting managers who are out of their office
on vacation or for personal reasons (C option is better as it excludes 'their' making it less ambiguous)
(E) for employees about contacting managers if they are out of their office
on vacation or for personal reasons

A) for employees about contacting managers while they are out of the
office on vacation or for personal reasons----->They can refer to employees or managers.Replace they with employees.It makes sense.Now do the same with managers.The sentence thus obtained is also logical.Hence pronoun Ambiguity

C)The correct answer ----->No error

The prepositional phrase "out of the office" does not have to modify what it's next to. Regrettably, this freedom means that it's still unclear who is out of the office -- the employees, or the managers. It's a modifier reference/ambiguity error, perfectly replicating the pre-existing pronoun reference/ambiguity error.
_________________

Kindly let me know the answer to this Question.. I have often read that Pronoun Ambiguity (Except Singular Plural Agreement can not be Make Break Factor in the Question) Is it correct?? How to solve this problem then...

deependra1234, to answer your question, ambiguity can definitely be a make-or-break if it's truly hard to tell (as it is here) which noun the pronoun is referring to. By the way, a good rule of thumb is that if some choices replace the pronoun with a noun, then the pronoun is probably considered ambiguous and should most likely be rejected in place of the noun. If a seemingly ambiguous pronoun appears in all the choices, it must be considered clear enough in its meaning.
_________________

What does the sentence mean. Company is outlining rules if the managers are out of office or the employees are out of office? Confused.

As per the meaning of the sentence, it should be "if the managers are out of office".

We are given rules for whom?? Employees.

What rules? They should not contact their Managers

Which Managers?? Who are out of office.

This is what Choice C clearly tells. Hence, the correct answer.
_________________

There is no "if" condition in the sentence as you mentioned. Company is outlining rules - this fact is unconditional.

The relative pronoun "who" touches "managers", implying "...managers are out of the office...".

Meaning and pronouns


The company manual specifically outlines rules[u] for employees about contacting managers while they are out of the office on vacation or for personal reasons.

(A) for employees about contacting managers while they are out of the office on vacation or for personal reasons ----- "they" is ambiguous as it could refer to "employees" or "managers".
(B) for employees about contacting their managers out of the office on vacation or for personal reasons ---- "out of office" is placed in an ambiguous way, since it could modify "managers" or "employees/contacting".
(C) for employees about contacting managers who are out of the office on vacation or for personal reasons ----- CORRECT
(D) for employees about contacting managers who are out of their office on vacation or for personal reasons ----- "their" is ambiguous as it could refer to "employees" or "managers".
(E) for employees about contacting managers if they are out of their office on vacation or for personal reasons ------ "they" is ambiguous as it could refer to "employees" or "managers".
_________________

Dear AnthonyRitz

What's wrong with choice B.?
(B) for employees about contacting their managers out of the office on vacation or for personal reasons

According to the solution in Veritas SC book:


I'm still not sure what is wrong with choice B?

Is it because "out of the office on vacation or ..." seems to modify the gerund "contacting" and not the noun "their managers" itself?