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After encountering this issue several times, both in automations I've created (even after knowing better!) and automations created by others, I believe that the current UI to edit labels via Jira automation isn't clear enough about the action being taken.
The default to Set (override and replace) here in automations is also inconsistent with the default to "Add to existing" in the Bulk edit flow.
This leads to repeated errors of overriding all existing labels when the user intended (and probably expected) to simply add the selected label(s) to the existing ones.
Screenshots are included below.
The Automation Edit UI for labels should be more like that on the Bulk Edit flow, which defaults to "add to existing" and makes it clear that there are multiple options for altering the labels.
1. Default the edits to "Add to existing"
This is considerably easier to undo if the user meant to do something else than the current behavior to remove all existing labels.
2. Clearly state the edit action type (SET, ADD, REMOVE, COPY) selected and have this action type continue to be visible even when labels have been added
3. Clearly show that there are multiple action types to use, whether through a dropdown indicator like the Bulk edit flow, showing all four types, or something else.
Illustrating points from above:
Image 1) Default view for editing labels isn't clear this is set and override.
Image 2) More options is about advanced editing, not more ways to set labels. This makes sense in the general edit fields use case but makes the ... even less intuitive.
Image 3) Selecting ... shows more options for editing labels.
Image 4) Selecting a label removes visibility to the edit type (here the prompt text was "Values to add" before a label was selected. No context on the edit type at all if labels are selected in both sections.
Image 5) This is the default for "Change Labels" under Edit Issues in the Bulk Edit flow. The default is "Add to existing" and the dropdown style makes it clear there are other options available.
Please consider these UI updates, they would make it easier to visually check that the automation is set to do what you intended and save quite a bit of pain trying to undo where automations have (unintentionally) overridden existing labels.
To my colleagues whose labels I accidentally removed this week - my apologies!