Managing Microsoft Office licenses for employees

Question

Our company currently purchases Microsoft Office licenses individually whenever new employees join. Is there a Microsoft solution that allows us to centrally purchase, assign, and manage Office licenses for all employees? Would Microsoft 365 Business Basic provide this capability? Some Office licenses are linked to former employees' accounts that have since been deleted. Is it possible to transfer or reuse those licenses for new employees when the original accounts are no longer accessible?

Answer 1

Hi @Thompson Eva

A Microsoft 365 business tenant gives your company a central Microsoft 365 admin center where authorized administrators can purchase subscriptions, create employee accounts, assign or remove licenses, monitor billing, and reuse available subscription seats. Microsoft 365 Business Basic supports centralized license management, but it does not include the fully installed desktop versions of Word, Excel, PowerPoint, and Outlook. It primarily provides the web and mobile apps, business email, cloud storage, and related online services.

Microsoft 365 Apps for business provides the installed Word, Excel, PowerPoint, Outlook, and OneNote applications, while Business Standard combines desktop apps with services such as hosted business email and collaboration capabilities.

Therefore, if employees need the traditional locally installed Office applications, Business Basic alone is not the right replacement for the Office licenses you currently purchase individually. Business Standard or Apps for business would usually be a closer match.

Once the organization has a Microsoft 365 tenant:

1. The company purchases the required number of subscription seats.
2. An administrator creates a work account for each employee.
3. The administrator assigns the appropriate license under Users > Active users or Billing > Licenses.
4. When an employee leaves, the administrator removes the license or deletes the employee account.
5. The released license becomes available for assignment to another employee.

Microsoft states that when a licensed user account is deleted, its license becomes available immediately for assignment to another user. Administrators can also unassign a license without deleting the account.

This model is preferable to having employees redeem individual Office purchases against personal or employee-specific Microsoft accounts because ownership, administration, billing, and reassignment remain under company control.

Ref: Assign or unassign licenses for users in the Microsoft 365 admin center

-Could you please let me know which specific types of licenses you are referring to? The transfer or reassignment process may vary depending on the license type.

In addition, before deleting a user account or removing its license, the company should ensure that all important data has been properly handled, including:

• Emails in Exchange Online
• Files stored in OneDrive
• Shared documents
• Data that must be retained for legal or compliance purposes
• Ownership of groups, applications, or other internal resources

Microsoft states that after a license is removed, the user’s data is retained only for a limited period. Deleting the user account may eventually result in the permanent deletion of mailbox and OneDrive data.

Answer 2

Yes. Microsoft provides centralized license management for employees through Microsoft 365. Licenses can be purchased for the organization, then assigned and managed centrally per user in the Microsoft 365 admin center, by PowerShell, or automatically through group-based licensing in Microsoft Entra ID.

Microsoft 365 Business Basic does provide centralized user license assignment and management. After licenses are purchased for the tenant, an admin can assign them to user accounts individually or through groups. Group-based licensing can automatically assign or remove licenses when users are added to or removed from a group.

Key points:

1. Each employee needs a user account and an assigned license to use Microsoft 365 services.
2. To assign licenses in the Microsoft 365 admin center, the admin must be at least a License Administrator or User Administrator.
3. If a user account is deleted, its license becomes immediately available to assign to someone else.
4. Deleted users’ data is retained for 30 days after license removal, but the license itself can be reused right away.
5. If a former employee’s account was deleted, the license is not permanently tied to that deleted account. It can be reassigned, provided the subscription still exists in the tenant.

For ongoing employee onboarding, the most scalable approach is usually:

1. Purchase enough Microsoft 365 licenses for the organization.
2. Create user accounts for employees.
3. Assign licenses either:
   • directly in the Microsoft 365 admin center, or
   • automatically by group membership.
4. When an employee leaves, unassign the license or delete the user account so the license becomes available for reuse.

If the goal is specifically to give employees desktop Office apps such as Word, Excel, and PowerPoint, verify that the chosen subscription includes those apps. The context confirms centralized license management, but the included apps depend on the product purchased.

---

• Assign Microsoft 365 licenses to user accounts
• Understand subscriptions and licenses in Microsoft 365 for business
• Assign or unassign licenses for users in the Microsoft 365 admin center
• Step 6 - Remove and delete a Microsoft 365 for business license from a former employee
• As an administrator, how do i give access to Word and the other office apps to a new employee? - Microsoft Q&A