diff --git a/e2e/scenarios/hotfix/hotfix-conflict-resolution.yaml b/e2e/scenarios/hotfix/hotfix-conflict-resolution.yaml
index 22f5e7bb..6a68575a 100644
--- a/e2e/scenarios/hotfix/hotfix-conflict-resolution.yaml
+++ b/e2e/scenarios/hotfix/hotfix-conflict-resolution.yaml
@@ -131,6 +131,20 @@ steps:
       # head and replays the check, so the resolution path stays covered.
       prs:
         open_with_label: "cascade-hotfix"
+      # The gitea harness creates PR labels on demand, so it cannot reproduce the
+      # real-GitHub behavior where "gh pr create --label X" fails hard when X does
+      # not yet exist. That gap let a missing label seed ship undetected: the
+      # generated apply job opened the conflict PR with --label
+      # cascade-hotfix-conflict but never created that label. Assert against the
+      # materialized workflow that real GitHub runs verbatim: the apply job must
+      # seed both labels before any PR is opened, and the workflow must request
+      # issues:write so "gh label create" is authorized.
+      workflow_files:
+        - path: ".github/workflows/cascade-hotfix.yaml"
+          contains:
+            - "gh label create cascade-hotfix "
+            - "gh label create cascade-hotfix-conflict "
+            - "issues: write"
 
   - name: "Resolve conflict with patched content for Version 1 base"
     action: resolve_conflict
diff --git a/internal/generate/hotfix.go b/internal/generate/hotfix.go
index dae8c180..48de1bd6 100644
--- a/internal/generate/hotfix.go
+++ b/internal/generate/hotfix.go
@@ -8,6 +8,20 @@ import (
 	"github.com/stablekernel/cascade/internal/config"
 )
 
+// hotfixLabel is the GitHub label applied to clean hotfix resolution PRs.
+//
+// The literal must stay in sync with hotfixPRLabel in internal/hotfix/plan.go:
+// the planner's protection suggestions seed the same label, and the two live in
+// separate packages without a shared constant.
+const hotfixLabel = "cascade-hotfix"
+
+// hotfixConflictLabel is the GitHub label applied to hotfix resolution PRs
+// that require manual conflict resolution.
+//
+// The literal must stay in sync with hotfixConflictPRLabel in
+// internal/hotfix/plan.go.
+const hotfixConflictLabel = "cascade-hotfix-conflict"
+
 // HotfixGenerator emits the cascade-hotfix workflow. It cherry-picks a trunk fix
 // onto a diverged intermediate environment by replaying the commit on an
 // env/<env> integration branch, opening a resolution pull request, and then
@@ -138,14 +152,16 @@ func (g *HotfixGenerator) writeTriggers(sb *strings.Builder) {
 }
 
 // writePermissions grants the scopes the hotfix workflow needs: contents:write
-// to push the cherry-pick branch, pull-requests:write to open the resolution PR,
-// and actions:read for workflow introspection.
+// to push the cherry-pick branch, issues:write to seed labels via gh label create
+// (required before gh pr create --label), pull-requests:write to open the
+// resolution PR, and actions:read for workflow introspection.
 func (g *HotfixGenerator) writePermissions(sb *strings.Builder) {
 	// Base scopes the hotfix workflow needs. A reusable callback cannot set its
 	// own job permissions, so any scope a callback declares (e.g. id-token: write
 	// for OIDC) is unioned in at the top level here.
 	base := [][2]string{
 		{"contents", "write"},
+		{"issues", "write"},
 		{"pull-requests", "write"},
 		{"actions", "read"},
 	}
@@ -264,6 +280,16 @@ func (g *HotfixGenerator) writeApplyJob(sb *strings.Builder) {
 	sb.WriteString("            echo \"::warning::Configure protection: gh api \\\"$PROT_PATH\\\" -X PUT -f required_status_checks.strict=true -F required_status_checks.contexts[]=hotfix-check\"\n")
 	sb.WriteString("          fi\n")
 
+	// Seed both resolution-PR labels before any PR is opened. gh pr create
+	// --label fails hard on a missing label; seeding here guarantees both the
+	// clean and conflict PR paths can open. The `|| true` keeps the step green on
+	// a repeated run where the label already exists, matching the seed command
+	// the planner surfaces (protectionSuggestions in internal/hotfix/plan.go).
+	sb.WriteString("      - name: Ensure hotfix labels exist\n")
+	sb.WriteString("        run: |\n")
+	fmt.Fprintf(sb, "          gh label create %s --color B60205 --description \"Cascade hotfix resolution PR\" || true\n", hotfixLabel)
+	fmt.Fprintf(sb, "          gh label create %s --color D93F0B --description \"Cascade hotfix resolution PR with cherry-pick conflicts\" || true\n", hotfixConflictLabel)
+
 	// Cherry-pick. Clean and conflict paths diverge after the cherry-pick result.
 	sb.WriteString("      - name: Cherry-pick and open resolution PR\n")
 	sb.WriteString("        run: |\n")
@@ -287,7 +313,7 @@ func (g *HotfixGenerator) writeApplyJob(sb *strings.Builder) {
 	sb.WriteString("            gh pr create \\\n")
 	sb.WriteString("              --base \"env/${TARGET_ENV}\" \\\n")
 	sb.WriteString("              --head \"$BRANCH\" \\\n")
-	sb.WriteString("              --label cascade-hotfix \\\n")
+	fmt.Fprintf(sb, "              --label %s \\\n", hotfixLabel)
 	sb.WriteString("              --title \"hotfix(${TARGET_ENV}): cherry-pick ${SHORT_SHA}\" \\\n")
 	sb.WriteString("              --body \"$BODY\"\n")
 	sb.WriteString("            gh pr merge --auto --squash \"$BRANCH\"\n")
@@ -301,7 +327,7 @@ func (g *HotfixGenerator) writeApplyJob(sb *strings.Builder) {
 	sb.WriteString("            gh pr create \\\n")
 	sb.WriteString("              --base \"env/${TARGET_ENV}\" \\\n")
 	sb.WriteString("              --head \"$BRANCH\" \\\n")
-	sb.WriteString("              --label cascade-hotfix-conflict \\\n")
+	fmt.Fprintf(sb, "              --label %s \\\n", hotfixConflictLabel)
 	sb.WriteString("              --title \"hotfix(${TARGET_ENV}): cherry-pick ${SHORT_SHA} (conflicts)\" \\\n")
 	sb.WriteString("              --body \"$CONFLICT_BODY\"\n")
 	sb.WriteString("          fi\n")
@@ -346,6 +372,7 @@ func (g *HotfixGenerator) writeCheckJob(sb *strings.Builder) {
 func (g *HotfixGenerator) writeContextJob(sb *strings.Builder) {
 	sb.WriteString("  context:\n")
 	sb.WriteString("    name: Hotfix Context\n")
+	// The 'cascade-hotfix' literal must match hotfixLabel.
 	sb.WriteString("    if: github.event_name == 'pull_request' && github.event.pull_request.merged == true && contains(github.event.pull_request.labels.*.name, 'cascade-hotfix')\n")
 	sb.WriteString("    runs-on: ubuntu-latest\n")
 	sb.WriteString("    outputs:\n")
@@ -393,6 +420,7 @@ func (g *HotfixGenerator) writeContextJob(sb *strings.Builder) {
 // mergedHotfixGuard is the if-condition gating the post-merge stages: the PR
 // merged and carried the cascade-hotfix label.
 func mergedHotfixGuard() string {
+	// The 'cascade-hotfix' literal must match hotfixLabel.
 	return "github.event_name == 'pull_request' && github.event.pull_request.merged == true && contains(github.event.pull_request.labels.*.name, 'cascade-hotfix')"
 }
 
diff --git a/internal/generate/hotfix_test.go b/internal/generate/hotfix_test.go
index d303e22a..f44e899d 100644
--- a/internal/generate/hotfix_test.go
+++ b/internal/generate/hotfix_test.go
@@ -104,6 +104,11 @@ func TestHotfixGenerator_Permissions(t *testing.T) {
 	assert.Contains(t, content, "contents: write")
 	assert.Contains(t, content, "pull-requests: write")
 	assert.Contains(t, content, "actions: read")
+	// issues: write is required so the apply job can call `gh label create` to
+	// seed the cascade-hotfix and cascade-hotfix-conflict labels. Without it
+	// GitHub returns HTTP 403, the || true swallows it silently, and the
+	// subsequent `gh pr create --label` hard-fails.
+	assert.Contains(t, content, "issues: write")
 }
 
 func TestHotfixGenerator_Jobs(t *testing.T) {
@@ -148,6 +153,31 @@ func TestHotfixGenerator_CleanPath(t *testing.T) {
 	assert.Contains(t, content, "gh pr merge --auto")
 }
 
+// TestHotfixGenerator_SeedsLabels guards the regression where the apply job ran
+// `gh pr create --label cascade-hotfix[-conflict]` without ever creating those
+// labels. `gh pr create --label X` hard-fails when label X does not exist, so
+// both the clean and conflict resolution PR paths broke. The apply job must seed
+// both labels before the cherry-pick step opens any PR.
+func TestHotfixGenerator_SeedsLabels(t *testing.T) {
+	gen := NewHotfixGenerator(threeEnvHotfixConfig(), "")
+	content, err := gen.Generate()
+	require.NoError(t, err)
+
+	// Both labels the resolution PRs reference must be created in the workflow.
+	assert.Contains(t, content, "gh label create cascade-hotfix ",
+		"apply job must seed the clean-path label so gh pr create --label does not hard-fail")
+	assert.Contains(t, content, "gh label create cascade-hotfix-conflict ",
+		"apply job must seed the conflict-path label so gh pr create --label does not hard-fail")
+
+	// The seed must run before the cherry-pick step that opens the labeled PRs.
+	seedIdx := strings.Index(content, "gh label create cascade-hotfix ")
+	cherryPickIdx := strings.Index(content, "Cherry-pick and open resolution PR")
+	require.NotEqual(t, -1, seedIdx, "label seed step must be present")
+	require.NotEqual(t, -1, cherryPickIdx, "cherry-pick step must be present")
+	assert.Less(t, seedIdx, cherryPickIdx,
+		"the label seed step must appear before the cherry-pick/open-PR step")
+}
+
 func TestHotfixGenerator_Q2BranchProtectionWarn(t *testing.T) {
 	gen := NewHotfixGenerator(threeEnvHotfixConfig(), "")
 	content, err := gen.Generate()
diff --git a/internal/hotfix/plan.go b/internal/hotfix/plan.go
index b4ae8723..c7ab23d8 100644
--- a/internal/hotfix/plan.go
+++ b/internal/hotfix/plan.go
@@ -20,8 +20,20 @@ import (
 const defaultRemote = "origin"
 
 // hotfixPRLabel is the label that identifies an in-flight hotfix resolution PR.
+//
+// The literal must stay in sync with hotfixLabel in
+// internal/generate/hotfix.go, which seeds and applies the same label in the
+// generated workflow. The two live in separate packages without a shared
+// constant.
 const hotfixPRLabel = "cascade-hotfix"
 
+// hotfixConflictPRLabel is the label applied to a hotfix resolution PR that
+// carries cherry-pick conflicts for a human to resolve.
+//
+// The literal must stay in sync with hotfixConflictLabel in
+// internal/generate/hotfix.go.
+const hotfixConflictPRLabel = "cascade-hotfix-conflict"
+
 // OpenPR is a minimal view of an open pull request returned by a PRChecker.
 type OpenPR struct {
 	Number int    `json:"number"`
@@ -360,6 +372,7 @@ func protectionSuggestions(branch string) []string {
 			"-F required_status_checks=null "+
 			"-F restrictions=null", branch),
 		fmt.Sprintf("gh label create %s --color B60205 --description \"Cascade hotfix resolution PR\" || true", hotfixPRLabel),
+		fmt.Sprintf("gh label create %s --color D93F0B --description \"Cascade hotfix resolution PR with cherry-pick conflicts\" || true", hotfixConflictPRLabel),
 	}
 }