diff --git a/components/server/src/workspace/workspace-starter.ts b/components/server/src/workspace/workspace-starter.ts
index 04d2fdec650e23..1dea0953403d5c 100644
--- a/components/server/src/workspace/workspace-starter.ts
+++ b/components/server/src/workspace/workspace-starter.ts
@@ -633,7 +633,9 @@ export class WorkspaceStarter {
         spec.setWorkspaceImage(instance.workspaceImage);
         spec.setWorkspaceLocation(workspace.config.workspaceLocation || spec.getCheckoutLocation());
         spec.setFeatureFlagsList(this.toWorkspaceFeatureFlags(featureFlags));
-        spec.setTimeout(await userTimeoutPromise);
+        if (workspace.type === 'regular') {
+            spec.setTimeout(await userTimeoutPromise);
+        }
         spec.setAdmission(admissionLevel);
         return spec;
     }
diff --git a/components/ws-manager/pkg/manager/status.go b/components/ws-manager/pkg/manager/status.go
index 52a2b7db1f6ccc..1bdcd3840fce28 100644
--- a/components/ws-manager/pkg/manager/status.go
+++ b/components/ws-manager/pkg/manager/status.go
@@ -731,23 +731,27 @@ func (m *Manager) isWorkspaceTimedOut(wso workspaceObjects) (reason string, err
 		return decide(start, m.Config.Timeouts.TotalStartup, activity)
 
 	case api.WorkspacePhase_RUNNING:
+		var timeout util.Duration
+		if ctv, ok := wso.Pod.Annotations[customTimeoutAnnotation]; ok {
+			if ct, err := time.ParseDuration(ctv); err == nil {
+				timeout = util.Duration(ct)
+			} else {
+				log.WithError(err).WithField("customTimeout", ctv).WithFields(wsk8s.GetOWIFromObject(&wso.Pod.ObjectMeta)).Warn("pod had custom timeout annotation set, but could not parse its value. Defaulting to ws-manager config.")
+				if wso.IsWorkspaceHeadless() {
+					timeout = m.Config.Timeouts.HeadlessWorkspace
+				} else {
+					timeout = m.Config.Timeouts.RegularWorkspace
+				}
+			}
+		}
 		if wso.IsWorkspaceHeadless() {
-			return decide(start, m.Config.Timeouts.HeadlessWorkspace, activityRunningHeadless)
+			return decide(start, timeout, activityRunningHeadless)
 		} else if lastActivity == nil {
 			// the workspace is up and running, but the user has never produced any activity
 			return decide(start, m.Config.Timeouts.TotalStartup, activityNone)
 		} else if isClosed {
 			return decide(*lastActivity, m.Config.Timeouts.AfterClose, activityClosed)
 		}
-		timeout := m.Config.Timeouts.RegularWorkspace
-		if ctv, ok := wso.Pod.Annotations[customTimeoutAnnotation]; ok {
-			if ct, err := time.ParseDuration(ctv); err != nil {
-				log.WithError(err).WithField("customTimeout", ctv).WithFields(wsk8s.GetOWIFromObject(&wso.Pod.ObjectMeta)).Warn("pod had custom timeout annotation set, but could not parse its value. Defaulting to ws-manager config.")
-				timeout = m.Config.Timeouts.RegularWorkspace
-			} else {
-				timeout = util.Duration(ct)
-			}
-		}
 		return decide(*lastActivity, timeout, activityNone)
 
 	case api.WorkspacePhase_INTERRUPTED: