If employees are assigned to a public holiday template, the system will already see this day as a non-working day even if the user doesn't have the option Entitlement Includes Public Holidays ticked in their planner settings.
If the users are required to book leave over a public holiday, this would only be possible if you, as an admin, remove the public holiday template from their profile.
To do this:
Click Access Button
then click Employee.
Click the Public Holidays drop-down then the template already chosen.
Input an effective date you wish to unassign the template from and click Save.
Ask the user to submit the annual leave.
After the annual leave has been submitted and approved, you can reassign the user to the desired public holiday template.
If you still encounter difficulties after following the above indications, raise a support case.