fix #45195

src/vs/base/common/labels.ts

@@ -325,7 +325,7 @@ export function template(template: string, values: { [key: string]: string | ISe
 			const left = segments[index - 1];
 			const right = segments[index + 1];
 
-			return [left, right].every(segment => segment && segment.type === Type.VARIABLE && segment.value.length > 0);
+			return [left, right].every(segment => segment && (segment.type === Type.VARIABLE || segment.type === Type.TEXT) && segment.value.length > 0);
 		}
 
 		// accept any TEXT and VARIABLE

src/vs/base/test/common/labels.test.ts

@@ -125,9 +125,9 @@ suite('Labels', () => {
 
 		// conditional separator
 		assert.strictEqual(labels.template('Foo${separator}Bar'), 'FooBar');
-		assert.strictEqual(labels.template('Foo${separator}Bar', { separator: { label: ' - ' } }), 'FooBar');
-		assert.strictEqual(labels.template('${separator}Foo${separator}Bar', { value: 'something', separator: { label: ' - ' } }), 'FooBar');
-		assert.strictEqual(labels.template('${value} Foo${separator}Bar', { value: 'something', separator: { label: ' - ' } }), 'something FooBar');
+		assert.strictEqual(labels.template('Foo${separator}Bar', { separator: { label: ' - ' } }), 'Foo - Bar');
+		assert.strictEqual(labels.template('${separator}Foo${separator}Bar', { value: 'something', separator: { label: ' - ' } }), 'Foo - Bar');
+		assert.strictEqual(labels.template('${value} Foo${separator}Bar', { value: 'something', separator: { label: ' - ' } }), 'something Foo - Bar');
 
 		// // real world example (macOS)
 		let t = '${activeEditorShort}${separator}${rootName}';