When can you remove the license from an O365 account and still maintain legal hold integrity and inactivate the mailbox?

Jon DeMersseman 21 Reputation points

We have a legal hold in place for our entire domain using O365's compliance module (Information Governance --> Retention Policy). We use AD sync to add and remove users between Active Directory and O365. We use a mixture of O365 E3 licenses or O365 E1 + Exchange Online (Plan 2) for our users. When an employee leaves, we delete their AD account. This syncs the account change to O365, which moves their account into the deleted users container for a 30-day period after which the mailbox becomes inactive and then the associated licenses are freed up to use on other accounts. It is my understanding that if we remove either the E3 or Exchange Online (Plan 2) license from an account prior to deletion that it breaks the account inactivation process and we lose all the hold data. Am I correct in my understanding? I have been unable to find the MS documentation that specifies this clearly. If you're aware of it, please hyperlink it. It would be nice to free up the licenses early, but not at the expense of losing the user data or being in license violation.

Thanks for clarification!

@Vasil Michev

Microsoft Exchange Online Management
Microsoft Exchange Online Management
Microsoft Exchange Online: A Microsoft email and calendaring hosted service.Management: The act or process of organizing, handling, directing or controlling something.
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  1. Vasil Michev 99,936 Reputation points MVP

    Never. The way you provision inactive mailboxes is by deleting the user account, your understanding is correct here. Removing the license does not trigger the same flow, and puts you in unsupported configuration (mailbox is now in erroneous state, license agreement is violated, etc).
    That said, you should have no issues with the current approach. The moment you delete the account/move it to the recycle bin, the license is freed and can be assigned to another user. It's only the "metadata" that remains stamped on the account, for the purpose of being able to correctly assign all the relevant licenses automatically, should you decide to recover the account.

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