We can make use of below sample code to set the Time Off for the user programmatically. In the below code we are setting time off of duration 8 hours on 7th May 2013.

IServiceManagement<IOrganizationService> orgServiceManagement =
ServiceConfigurationFactory.CreateManagement<IOrganizationService>(new Uri("https://orgname.crm5.dynamics.com/XRMServices/2011/Organization.svc"));
AuthenticationCredentials authCredentials = new AuthenticationCredentials();
authCredentials.ClientCredentials.UserName.UserName = "user@domain.onmicrosoft.com";
authCredentials.ClientCredentials.UserName.Password = "password";
AuthenticationCredentials tokenCredentials = orgServiceManagement.Authenticate(authCredentials);
OrganizationServiceProxy organizationProxy = new OrganizationServiceProxy(orgServiceManagement, tokenCredentials.SecurityTokenResponse);
// Get the user id
Guid userid = ((WhoAmIResponse)organizationProxy.Execute(new WhoAmIRequest())).UserId;
// Get the calendar id of the user
Entity systemUserEntity = organizationProxy.Retrieve("systemuser", userid, new ColumnSet(new String[] { "calendarid"}));
// Retrieve the calendar of the user
Entity userCalendarEntity = organizationProxy.Retrieve("calendar", ((Microsoft.Xrm.Sdk.EntityReference)(systemUserEntity.Attributes["calendarid"])).Id, new ColumnSet(true));
// Retrieve the calendar rules defined in the calendar
EntityCollection calendarRules = (EntityCollection)userCalendarEntity.Attributes["calendarrules"];
// Create a new inner calendar
Entity newInnerCalendar = new Entity("calendar");
newInnerCalendar.Attributes["businessunitid"] = new EntityReference("businessunit", ((Microsoft.Xrm.Sdk.EntityReference)(userCalendarEntity["businessunitid"])).Id);
Guid innerCalendarId = organizationProxy.Create(newInnerCalendar);
// Create a new calendar rule and assign the inner calendar id to it
Entity calendarRule = new Entity("calendarrule");
calendarRule.Attributes["description"] = "Time Off Rule";
calendarRule.Attributes["duration"] = 480;
calendarRule.Attributes["extentcode"] = 2;
calendarRule.Attributes["pattern"] = "FREQ=DAILY;INTERVAL=1;COUNT=1";
calendarRule.Attributes["rank"] = 0;
calendarRule.Attributes["timezonecode"] = 190;
calendarRule.Attributes["innercalendarid"] = new EntityReference("calendar", innerCalendarId);
// starting at 12:00 on 7 May
calendarRule.Attributes["starttime"] = new DateTime(2013, 5, 7,0,0,0,DateTimeKind.Utc);
calendarRules.Entities.Add(calendarRule);
// assign all the calendar rule back to the user calendar
userCalendarEntity.Attributes["calendarrules"] = calendarRules;
// update the user calendar entity that has the new rule
organizationProxy.Update(userCalendarEntity);
Entity calendarRule1 = new Entity("calendarrule");
// duration of 8 hours
calendarRule1.Attributes["duration"] = 480;
calendarRule1.Attributes["effort"] = 2.0;
calendarRule1.Attributes["issimple"] = true;
calendarRule1.Attributes["offset"] = 0;
calendarRule1.Attributes["rank"] = 0;
// subcode 6= vacation
calendarRule1.Attributes["subcode"] = 6;
// time code 2 = unavailable
calendarRule1.Attributes["timecode"] = 2;
calendarRule1.Attributes["timezonecode"] = -1;
calendarRule1.Attributes["calendarid"] = new EntityReference("calendar", innerCalendarId);
EntityCollection innerCalendarRules = new EntityCollection();
innerCalendarRules.EntityName = "calendarrule";
innerCalendarRules.Entities.Add(calendarRule1);
newInnerCalendar.Attributes["calendarrules"] = innerCalendarRules;
newInnerCalendar.Attributes["calendarid"] = innerCalendarId;
organizationProxy.Update(newInnerCalendar);
Hope it helps
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