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When changing a staff member to Terminated status, it should also uncheck the timesheet requirement as the staff member will still appear in the drop-down list if the timesheet requirement is still checked, even when in terminated status
I think more accurately this should at least pop up a reminder that the timesheet requirement is still checked and do you want to uncheck it. but if you have not run payroll yet you do not want it to auto uncheck the timesheet if you are using this to calculate your payroll.