Microsoft 365 License Reclamation for Departing Employees

Reclaiming Microsoft 365 licenses from departed employees reduces costs and prevents unauthorized account access. Follow a structured offboarding process to handle accounts properly. Immediate steps on the last day: block the user's sign-in (admin.microsoft.com > Active users > click user > Block sign-in), reset their password to invalidate any saved sessions, and revoke active MFA sessions. Grant their manager access to their mailbox and OneDrive for a transition period (typically 30 days). After the transition period: convert the mailbox to a shared mailbox (no license required, allows others to access historic email), set up auto-forward or auto-reply if needed, then remove the license. OneDrive files are retained for 30 days by default after license removal — adjust this in SharePoint admin settings if more time is needed. Remove the user from all Teams, Groups, and security groups. Document the offboarding steps in your IT runbook to ensure consistency.