Old hat picked up by grass for Christmas? (7)
I believe the answer is:
holiday
'christmas?' is the definition.
(christmas is a kind of holiday)
'old hat picked up by grass' is the wordplay.
'old' becomes 'o' (common abbreviation eg in OE for Old English).
'hat' becomes 'lid' (lid can informally mean a hat).
'picked up by' is an insertion indicator (some letters collected or picked up by others).
'grass' becomes 'hay' (hay is dried grass).
'o'+'lid'='olid'
'olid' put within 'hay' is 'HOLIDAY'.
'for' is the link.
(Other definitions for holiday that I've seen before include "Time off work" , "rest" , "given a break" , "- leave" , "Vacation" .)