It works this way:
There are 2 situations that may occur:

1) You set your vacation days BEFORE your opponent made her/his move in a particular game. After your opponent makes her/his move, the remaining time will include the vacation days you set before. E.g . if it's a 1-day-per-move game and you set Tuesday and Wednesday as your vacation days (let's presume your opponent made her/his move on Monday at 10:00) plus your weekend days are Thursday and Friday, the time of your time-out will be set at Saturday 10:00.

2) The problem is when you set your vacation days when it's your turn, i.e. AFTER your opponent made her/his move. The system will not automatically calculate these vacation days into the remaining time so the game still shows Tuesday 10:00 as the time-out time. What happens on Tuesday at 10:00? The system first checks whether you have this date among your vacation days or weekend days. If not, it checks for the auto-vac. In all three cases, you get 24 hours added on.