Find the 3rd Maximum Salary for each department based on table data

Question

I need to find out the 3rd maximum salary for an employee for each department in a table. if no 3rd maximum salary exists then display 2nd maximum salary. if no 2nd maximum salary exist then find the highest salary. How to achieve this result in sql-server?

The table structure is given below

create table employee1(empid int, empname varchar(10), deptid int, salary money)

insert into employee1
select 1,'a',1, 1000
union
select 1,'b',1, 1200 
union
select 1,'c',1, 1500 
union
select 1,'c',1, 15700 
union
select 1,'d',2, 1000 
union
select 1,'e',2, 1200 
union
select 1,'g',3, 1500 

I have tried the common way of getting the maximum salary for each category using row_number function.

;with cte
as
( 
select ROW_NUMBER( ) over( partition by deptid order by salary) as id, * from employee1 
)
select * from cte

Answer 1

Select EmpID,empname,deptid,salary
 From (
Select *
      ,RN  = Row_Number() over (Partition By deptid Order By Salary)
      ,Cnt = sum(1) over (Partition By deptid)
 From  employee1
      ) A
 Where RN = case when Cnt<3 then Cnt else 3 end

Returns