diff --git a/enrol/manual/lib.php b/enrol/manual/lib.php
index b4221d005f9..3ae5d0fd176 100644
--- a/enrol/manual/lib.php
+++ b/enrol/manual/lib.php
@@ -127,18 +127,13 @@ class enrol_manual_plugin extends enrol_plugin {
      */
     public function add_default_instance($course) {
         $expirynotify = $this->get_config('expirynotify', 0);
-        if ($expirynotify == 2) {
-            $expirynotify = 1;
-            $notifyall = 1;
-        } else {
-            $notifyall = 0;
-        }
+
         $fields = array(
             'status'          => $this->get_config('status'),
             'roleid'          => $this->get_config('roleid', 0),
             'enrolperiod'     => $this->get_config('enrolperiod', 0),
             'expirynotify'    => $expirynotify,
-            'notifyall'       => $notifyall,
+            'notifyall'       => $expirynotify == 2 ? 1 : 0,
             'expirythreshold' => $this->get_config('expirythreshold', 86400),
         );
         return $this->add_instance($course, $fields);
diff --git a/enrol/manual/tests/lib_test.php b/enrol/manual/tests/lib_test.php
index c5ba4f69a85..a8a6e86a3bd 100644
--- a/enrol/manual/tests/lib_test.php
+++ b/enrol/manual/tests/lib_test.php
@@ -25,6 +25,7 @@
 namespace enrol_manual;
 
 use course_enrolment_manager;
+use stdClass;
 
 defined('MOODLE_INTERNAL') || die();
 
@@ -543,4 +544,107 @@ class lib_test extends \advanced_testcase {
         // Manual enrol has 2 enrol actions -- edit and unenrol.
         $this->assertCount(2, $actions);
     }
+
+    /**
+     * Test how the default enrolment instance inherits its settings from the global plugin settings.
+     *
+     * @dataProvider default_enrolment_instance_data_provider
+     * @param stdClass $expectation
+     * @param stdClass $globalsettings
+     * @covers \enrol_manual::add_default_instance
+     */
+    public function test_default_enrolment_instance_acquires_correct_settings(stdClass $expectation, stdClass $globalsettings) {
+        global $DB;
+
+        $this->resetAfterTest();
+
+        $generator = $this->getDataGenerator();
+
+        // Given the plugin is globally configured with the following settings.
+        $plugin = enrol_get_plugin('manual');
+        $plugin->set_config('status', $globalsettings->status);
+        $plugin->set_config('roleid', $globalsettings->roleid);
+        $plugin->set_config('enrolperiod', $globalsettings->enrolperiod);
+        $plugin->set_config('expirynotify', $globalsettings->expirynotify);
+        $plugin->set_config('expirythreshold', $globalsettings->expirythreshold);
+
+        // When creating a course.
+        $course = $generator->create_course();
+
+        // Then the default manual enrolment instance being created is properly configured.
+        $enrolinstance = $DB->get_record('enrol', ['courseid' => $course->id, 'enrol' => 'manual']);
+        $this->assertEquals($expectation->status, $enrolinstance->status);
+        $this->assertEquals($expectation->roleid, $enrolinstance->roleid);
+        $this->assertEquals($expectation->enrolperiod, $enrolinstance->enrolperiod);
+        $this->assertEquals($expectation->expirynotify, $enrolinstance->expirynotify);
+        $this->assertEquals($expectation->notifyall, $enrolinstance->notifyall);
+        $this->assertEquals($expectation->expirythreshold, $enrolinstance->expirythreshold);
+    }
+
+    /**
+     * Data provider for test_default_enrolment_instance_acquires_correct_settings().
+     *
+     * @return array
+     */
+    public function default_enrolment_instance_data_provider(): array {
+        $studentroles = get_archetype_roles('student');
+        $studentrole = array_shift($studentroles);
+
+        $teacherroles = get_archetype_roles('teacher');
+        $teacherrole = array_shift($teacherroles);
+
+        return [
+            'enabled, student role, no duration set, notify no one on expiry, 12 hours notification threshold' => [
+                'expectation' => (object) [
+                    'status' => ENROL_INSTANCE_ENABLED,
+                    'roleid' => $studentrole->id,
+                    'enrolperiod' => 0,
+                    'expirynotify' => 0,
+                    'notifyall' => 0,
+                    'expirythreshold' => 12 * HOURSECS,
+                ],
+                'global settings' => (object) [
+                    'status' => ENROL_INSTANCE_ENABLED,
+                    'roleid' => $studentrole->id,
+                    'enrolperiod' => 0,
+                    'expirynotify' => 0,
+                    'expirythreshold' => 12 * HOURSECS,
+                ],
+            ],
+            'enabled, student role, 72 hours duration, notify enroller only on expiry, 1 day notification threshold' => [
+                'expectation' => (object) [
+                    'status' => ENROL_INSTANCE_ENABLED,
+                    'roleid' => $studentrole->id,
+                    'enrolperiod' => 72 * HOURSECS,
+                    'expirynotify' => 1,
+                    'notifyall' => 0,
+                    'expirythreshold' => DAYSECS,
+                ],
+                'global settings' => (object) [
+                    'status' => ENROL_INSTANCE_ENABLED,
+                    'roleid' => $studentrole->id,
+                    'enrolperiod' => 72 * HOURSECS,
+                    'expirynotify' => 1,
+                    'expirythreshold' => DAYSECS,
+                ],
+            ],
+            'disabled, teacher role, no duration set, notify enroller and enrolled on expiry, 0 notification threshold' => [
+                'expectation' => (object) [
+                    'status' => ENROL_INSTANCE_DISABLED,
+                    'roleid' => $teacherrole->id,
+                    'enrolperiod' => 0,
+                    'expirynotify' => 2,
+                    'notifyall' => 1,
+                    'expirythreshold' => 0
+                ],
+                'global settings' => (object) [
+                    'status' => ENROL_INSTANCE_DISABLED,
+                    'roleid' => $teacherrole->id,
+                    'enrolperiod' => 0,
+                    'expirynotify' => 2,
+                    'expirythreshold' => 0,
+                ],
+            ],
+        ];
+    }
 }