While working on D365 on-premise version, created an action which takes two parameters of type entity reference, one input and other output.

Input parameter is an entity reference to Email template and output parameter is an entity reference of type Email. objective is to create and email from template and return the created email.

However, when calling the action from a workflow, it threw an exception as below.

Entity Reference cannot have Id and Key Attributes

And it seems this is not the first time we have seen this error. Here is the link to an old post where such error was reported. Understood that workflow is not accepting output parameter of type entity reference with null value.

So as a workaround, assigned out parameter with a dummy email, before calling the workflow, which resolved the issue for me.

Seems this issue was not resolved, another observation is we are on an old roll-up for on-premise, need to see if applying new roll ups available may fix this issue.