I want to allow project leads to manage their users: add / remove developers.
I have an "Administrator" project role. I can add this role to the Project Lead.
Where do I set up the permissions for the Project Lead user?
You need to have "Jira Admin" rights, so that you can edit the permission scheme.
I'm 100% in favour of permission schemes that include "project lead has project administrator rights", but a lot of places don't do that (mostly because Jira can be complex and they don't know that the option is there!)
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