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Holiday Time off type is used to auto populate holidays in users timesheets. This happens when you have Holiday time off type selected and auto populate is enabled in List Time Off Types screen. In this case the application assumes that holidays are predetermined holidays and hence dose not require any one to approve the same.  

Disable auto populate feature in order to stop the auto approval of the holiday time off type by the application.

Related Items:

How to enable or disable the Auto-Populate holiday hours feature on users’ timesheet?