It is colloquial, as far as I know. It means I/you/we (depending on the context) don't have to work on Monday. A direct word-for-word translation doesn't work, so you'll just have to remember it... If you are uncomfortable with it, you can say equally well, " I don't have to work on Monday" and you won't come across as too formal. "That Monday is a holiday" will not usually work however, because that would mean no one needs to work on Monday. You'd say "That Monday is off" if for example you worked the night shift on Saturday and Sunday, so your boss gave you permission to stay home on Monday.