In 2015, Stefan and the team at the time introduced a rewrite to how the morale feature worked. This included removing the 35% rule.
In Feb 2017, I reverted most of this change, as it was received poorly by nearly everybody and was deemed to have made morale worse. Unfortunately, due to how the change was written, the 35% rule wasn’t able to be re-added with the reversion.
In July 2017, the 35% rule was brought back. Unfortunately, it was found to be exploitable due to remnants of the 2015 morale rewrite. It was removed again as the exploit was worse than not having it.
It is planned to return, with the exploit fixed, but no current ETA.