diff --git a/src/client.ts b/src/client.ts
index d965524cf..b2d52d085 100644
--- a/src/client.ts
+++ b/src/client.ts
@@ -842,8 +842,39 @@ export class MatrixClient extends EventEmitter {
         // actions for themselves, so we have to kinda help them out when they are encrypted.
         // We do this so that push rules are correctly executed on events in their decrypted
         // state, such as highlights when the user's name is mentioned.
-        this.on("Event.decrypted", (event: MatrixEvent) => {
-            this.updateEncryptedRoomNotificationCount(event);
+        this.on("Event.decrypted", (event) => {
+            const oldActions = event.getPushActions();
+            const actions = this.pushProcessor.actionsForEvent(event);
+            event.setPushActions(actions); // Might as well while we're here
+
+            const room = this.getRoom(event.getRoomId());
+            if (!room) return;
+
+            const currentCount = room.getUnreadNotificationCount(NotificationCountType.Highlight);
+
+            // Ensure the unread counts are kept up to date if the event is encrypted
+            // We also want to make sure that the notification count goes up if we already
+            // have encrypted events to avoid other code from resetting 'highlight' to zero.
+            const oldHighlight = oldActions && oldActions.tweaks
+                ? !!oldActions.tweaks.highlight : false;
+            const newHighlight = actions && actions.tweaks
+                ? !!actions.tweaks.highlight : false;
+            if (oldHighlight !== newHighlight || currentCount > 0) {
+                // TODO: Handle mentions received while the client is offline
+                // See also https://github.com/vector-im/element-web/issues/9069
+                if (!room.hasUserReadEvent(this.getUserId(), event.getId())) {
+                    let newCount = currentCount;
+                    if (newHighlight && !oldHighlight) newCount++;
+                    if (!newHighlight && oldHighlight) newCount--;
+                    room.setUnreadNotificationCount(NotificationCountType.Highlight, newCount);
+
+                    // Fix 'Mentions Only' rooms from not having the right badge count
+                    const totalCount = room.getUnreadNotificationCount(NotificationCountType.Total);
+                    if (totalCount < newCount) {
+                        room.setUnreadNotificationCount(NotificationCountType.Total, newCount);
+                    }
+                }
+            }
         });
 
         // Like above, we have to listen for read receipts from ourselves in order to
@@ -889,38 +920,6 @@ export class MatrixClient extends EventEmitter {
         });
     }
 
-    /**
-     * In encrypted rooms we can't rely on the server giving as the right
-     * notification count as it can't see the event type and message content.
-     * Therefore we increment the counters manually client-side
-     */
-    private updateEncryptedRoomNotificationCount(event: MatrixEvent): void {
-        // TODO: Handle mentions received while the client is offline
-        // See also https://github.com/vector-im/element-web/issues/9069
-
-        const room = this.getRoom(event.getRoomId());
-        const actions = this.pushProcessor.actionsForEvent(event);
-        event.setPushActions(actions); // Might as well while we're here
-
-        if (!room) return;
-        // If the user has already read the message don't increase counters
-        if (room.hasUserReadEvent(this.getUserId(), event.getId())) return;
-
-        const currentHighlightCount = room.getUnreadNotificationCount(NotificationCountType.Highlight);
-        const currentTotalCount = room.getUnreadNotificationCount(NotificationCountType.Total);
-
-        const newHighlight = Boolean(actions?.tweaks?.highlight);
-        const newNotify = Boolean(actions?.notify);
-
-        if (newHighlight) {
-            room.setUnreadNotificationCount(NotificationCountType.Highlight, currentHighlightCount + 1);
-        }
-
-        if (newNotify) {
-            room.setUnreadNotificationCount(NotificationCountType.Total, currentTotalCount + 1);
-        }
-    }
-
     /**
      * High level helper method to begin syncing and poll for new events. To listen for these
      * events, add a listener for {@link module:client~MatrixClient#event:"event"}
diff --git a/src/models/event.ts b/src/models/event.ts
index 05070cdac..317377b1a 100644
--- a/src/models/event.ts
+++ b/src/models/event.ts
@@ -157,7 +157,6 @@ export interface IDecryptOptions {
 
 export class MatrixEvent extends EventEmitter {
     private pushActions: IActionsObject = null;
-    private wirePushActions: IActionsObject = null;
     private _replacingEvent: MatrixEvent = null;
     private _localRedactionEvent: MatrixEvent = null;
     private _isCancelled = false;
@@ -989,16 +988,7 @@ export class MatrixEvent extends EventEmitter {
      * @return {?Object} push actions
      */
     public getPushActions(): IActionsObject | null {
-        return this.pushActions || this.wirePushActions;
-    }
-
-    /**
-     * Get the push actions, if known, for this event
-     *
-     * @return {?Object} push actions
-     */
-    public getWirePushActions(): IActionsObject | null {
-        return this.wirePushActions;
+        return this.pushActions;
     }
 
     /**
@@ -1007,11 +997,7 @@ export class MatrixEvent extends EventEmitter {
      * @param {Object} pushActions push actions
      */
     public setPushActions(pushActions: IActionsObject): void {
-        if (this._decryptionPromise) {
-            this.wirePushActions = pushActions;
-        } else {
-            this.pushActions = pushActions;
-        }
+        this.pushActions = pushActions;
     }
 
     /**
diff --git a/src/sync.ts b/src/sync.ts
index 53d245aeb..5cbe5c2eb 100644
--- a/src/sync.ts
+++ b/src/sync.ts
@@ -1222,18 +1222,24 @@ export class SyncApi {
             const accountDataEvents = this.mapSyncEventsFormat(joinObj.account_data);
 
             const encrypted = client.isRoomEncrypted(room.roomId);
-            // We do this first so it's correct when any of the events fire. We
-            // track unread notifications ourselves in encrypted rooms in
-            // MatrixClient::updateEncryptedRoomNotificationCount()
-            if (!encrypted && joinObj.unread_notifications) {
+            // we do this first so it's correct when any of the events fire
+            if (joinObj.unread_notifications) {
                 room.setUnreadNotificationCount(
                     NotificationCountType.Total,
                     joinObj.unread_notifications.notification_count,
                 );
-                room.setUnreadNotificationCount(
-                    NotificationCountType.Highlight,
-                    joinObj.unread_notifications.highlight_count,
-                );
+
+                // We track unread notifications ourselves in encrypted rooms, so don't
+                // bother setting it here. We trust our calculations better than the
+                // server's for this case, and therefore will assume that our non-zero
+                // count is accurate.
+                if (!encrypted
+                    || (encrypted && room.getUnreadNotificationCount(NotificationCountType.Highlight) <= 0)) {
+                    room.setUnreadNotificationCount(
+                        NotificationCountType.Highlight,
+                        joinObj.unread_notifications.highlight_count,
+                    );
+                }
             }
 
             joinObj.timeline = joinObj.timeline || {} as ITimeline;