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I understand the expression to mean doing something on a holiday that you would normally do at your job. So, am I to understand that the expression simply refers to a bus driver going for a ride on the bus on his day off?

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Various dictionaries confirm this as the meaning and give the first use as 1893: Wordorigins.org points to it in English Illustrated Magazine.

I shall indeed take a holiday soon,...but it will be a "Busman’s Holiday".

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    Just to expand the answer a little bit. Here's a link to the article. It refers to a box-seat, so I believe that "busman" actually means a coach driver rather than the modern definition of a bus driver. – carmbrester Mar 1 '11 at 23:27

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