Reproduction Steps
Place a TextLabel under an AutomaticSize = XY GuiObject, and then place a UIPadding under the TextLabel:
The size of the containing GuiObject will be incorrect.
Expected Behavior
The AutomaticSize = XY GuiObject should be exactly the same size as the child TextLabel.
Actual Behavior
It seems as though the AutomaticSize calculation assumes that the UIPadding applied to the containing GuiObject rather than the child TextLabel that it was actually applied to.
Workaround
Yes, you can nest your TextLabel inside an additional AutomaticSize = XY frame and a put the UIPadding under that additional frame instead of under the TextLabel itself.
Issue Area: Engine
Issue Type: Display
Impact: Moderate
Frequency: Sometimes