Treat TimeoutError as workflow/update failure instead of task failure

Fixes temporalio#798

Author: cretz

temporalio/worker/_workflow_instance.py

@@ -1708,10 +1708,11 @@ def _instantiate_workflow_object(self) -> Any:
 
     def _is_workflow_failure_exception(self, err: BaseException) -> bool:
         # An exception is a failure instead of a task fail if it's already a
-        # failure error or if it is an instance of any of the failure types in
-        # the worker or workflow-level setting
+        # failure error or if it is a timeout error or if it is an instance of
+        # any of the failure types in the worker or workflow-level setting
         return (
             isinstance(err, temporalio.exceptions.FailureError)
+            or isinstance(err, asyncio.TimeoutError)
             or any(isinstance(err, typ) for typ in self._defn.failure_exception_types)
             or any(
                 isinstance(err, typ)

tests/worker/test_workflow.py

@@ -6990,3 +6990,34 @@ async def test_update_handler_semaphore_acquisition_respects_timeout(
             ever_in_critical_section=3, peak_in_critical_section=3
         ),
     )
+
+@workflow.defn
+class TimeoutErrorWorkflow:
+    @workflow.run
+    async def run(self, scenario) -> None:
+        if scenario == "workflow.wait_condition":
+            await workflow.wait_condition(lambda: False, timeout=0.01)
+        elif scenario == "asyncio.wait_for":
+            await asyncio.wait_for(asyncio.sleep(1000), timeout=0.01)
+        elif scenario == "asyncio.timeout":
+            async with asyncio.timeout(0.1):
+                await asyncio.sleep(1000)
+        else:
+            raise RuntimeError("Unrecognized scenario")
+
+async def test_workflow_timeout_error(client: Client):
+    async with new_worker(client, TimeoutErrorWorkflow) as worker:
+        scenarios = ["workflow.wait_condition", "asyncio.wait_for"]
+        if sys.version_info >= (3, 11):
+            scenarios.append("asyncio.timeout")
+
+        for scenario in scenarios:
+            with pytest.raises(WorkflowFailureError) as err:
+                await client.execute_workflow(
+                    TimeoutErrorWorkflow.run,
+                    scenario,
+                    id=f"workflow-{uuid.uuid4()}",
+                    task_queue=worker.task_queue,
+                )
+            assert isinstance(err.value.cause, ApplicationError)
+            assert err.value.cause.type == "TimeoutError"