London Patch 2
The Calendar feature is rather old and, as a result, has some quirks.
When a holiday is defined within a Calendar, the start time/end time fields must be left alone (leave them as 00:00:00). The user only needs to specify the date - nothing more.
The Calendar actually uses the start/end time fields on the holiday record to work out when the user is working, and not when they are on holiday.
The above logic is why, in the user's example of setting their holiday to start at 00:00:01 and to end at 23:59:59, the Calendar thought the user was available to work between those hours (rather than they were on holiday during those hours). Hence, the Inactivity Monitors were firing.
In summary, define holidays by the date field and do not manipulate the start/end time fields on the holiday record (Unless of course there is an exception where the holiday may only last a portion of the day. For example, if the user's holiday lasts from 00:00:00 to 14:00:00. In such a case, the user would need to provide the working hours to the start/end time fields, 14:00:00 to 23:59:59).