To ensure an SLA observes holidays, you must first define a Holiday Schedule containing specific dates (holiday records). However, an SLA cannot reference a holiday schedule directly. Instead, you must create or modify a Customer Service Schedule (business hours) and associate the holiday schedule with it. This allows the system to subtract those specific dates from the time calculation. Finally, you must update the SLA record to use this specific Customer Service Schedule. Other options, such as associating holidays directly with an SLA or using entitlements for holiday management, are technically incorrect within the Dynamics 365 configuration framework.

Microsoft Learn: Set up a holiday schedule (Customer Service Hub).

Detail: This documentation specifies that users must first create a holiday schedule to define when the service is unavailable.

Source Identifier: https://learn.microsoft.com/en-us/dynamics365/customer-service/set-up-holiday-schedule

Microsoft Learn: Create a customer service schedule and define the work hours.

Detail: This section explains that the customer service schedule is where the holiday schedule is actually selected to ensure "the service level agreement (SLA) is not affected" by those dates.

Source Identifier: https://learn.microsoft.com/en-us/dynamics365/customer-service/create-customer-service-schedule-define-work-hours

Microsoft Learn: Define service level agreements (SLAs).

Detail: Explains that the Business Hours (Customer Service Schedule) field in the SLA record is what determines how time is calculated relative to the work week and holidays.

Source Identifier: https://learn.microsoft.com/en-us/dynamics365/customer-service/define-service-level-agreements