Both are fine and, yes, you used 'constructed' correctly.
'very' isn't needed, though. You could omit it - unless, of course, it's your intent to emphasize that their schedules are wide-open, completely open. In that case you could leave it in.
John and Peter are free because it is their school holidays.
John and Peter are free because their school holidays are on.
Here's another way:
John and Peter are free because they're on their school break.
All the best.
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