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Step 6 - Remove and delete the Microsoft 365 license from a former employee

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If you don't want to pay for a license after someone leaves your organization, you need to remove their Microsoft 365 license and then delete it from your subscription. You can assign a license to another user if you don't delete it. Before you remove a license you must remove all holds for the user. For more information about holds, see Remove an In-Place Hold in Exchange Online.

If the mailbox needs to be accessed by authorized people who have been granted eDiscovery permissions for compliance or legal reasons, it must be assigned an Exchange Online Plan 2 license (or an Exchange Online Plan 1 license with an Exchange Online Archiving add-on license) so that a hold can be applied to the mailbox before it's deleted. After the user account is deleted, any Exchange Online license associated with the user account will be available to assign to a new user.

When you remove the license, all that user's data is held for 30 days. You can access the data, or restore the account if the user comes back. After 30 days, all the user's data (except for documents stored on SharePoint Online) is permanently deleted from Microsoft 365 and can't be recovered.

Remove licenses

  1. In the admin center, go to the Users > Active users page.
  2. Select the name of the employee that you want to block, and then select the Licenses and Apps tab.
  3. Clear the check boxes for the license(s) you want to remove, and then select Save changes.

Reduce the number of licenses

To reduce the number of licenses you're paying for until you hire another person, do the following steps:

  1. In the admin center, go to the Billing > Your products page, and select the Products tab.
  2. Select the subscription from which you want to remove licenses.
  3. On the details page, select Remove licenses.
  4. In the Remove licenses pane, under New quantity, in the Total licenses box, enter the total number of licenses that you want for this subscription. For example, if you have 25 licenses and you want to remove one of them, enter 24.
  5. Select Save.

When you add another person to your business, you'll be prompted to buy a license at the same time, with just one step!

For more information about managing user licenses for Microsoft 365 for business, see Assign licenses to users in Microsoft 365 for business, and Assign or unassign licenses for users in the Microsoft 365 admin center.

How the deleted employee account affects their PTSN number

When you remove a user's license from Microsoft 365, the PSTN calling number associated with the user will be released. You can assign it to another user.

If the user belongs to a queue group, they will no longer be a viable target of the call queue agents. So, we recommend also removing the user from the groups associated with the call queue.

Set up call forwarding to people in your organization

If you need to set up call forwarding for the terminated employee's phone number, the call forwarding setting under calling policies can be set up forwarding. Incoming calls can be forwarded to other users or can ring another person at the same time. For more information, see Calling policies in Microsoft Teams.