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I have an entitlement process with a single milestone in it. I've created a support holiday and linked it to the business hours record I have set up on the milestone and on the entitlement process.

According to the documentation

Escalation rules and entitlement milestones wouldn’t apply during the holiday.

But when I look at the case during the holiday, I can see the milestone time still counting down like normal. Why is that? Shouldn't the milestone be stopped during the holiday?

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Looks like this is an issue with the milestone timer component. The remaining time on the milestone does not change, but the component just starts counting down from whatever the remaining time is on page load.

Similar to this issue, but can not be solved by adding the stopped fields on the page layout. Guess I'll be writing my own component instead.

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