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Time reporting, manual transactions and material issues are allowed when the task is on hold. It looks like on hold doesn't do anything other than restrict the status change. What is the exact purpose of having the on-hold functionality in work tasks?
It avoids the user from changing the status and it allows to do other activities with respect to the status of the work task. This simply says that the task is put on hold and cannot proceed this point onward until on-hold is removed.

It is a kind of high-level decision to keep a task on-hold, therefore transaction level has not done restrictions with respect to the status of the Work Order

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