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Can a Jira automation rule and an Out of Office rule fight over the same work item?

They can: a Jira automation rule that assigns to a fixed person puts the work item back on whoever is away, and the Out of Office rule passes it to the coverer again.

Out of Office detects the loop, stops reassigning that work item and records it as a failed assignment in the rule's Reassignment Log, but the automation rule keeps running until you change it.