What is an Unlicensed User in Microsoft 365?

An Unlicensed User in Microsoft 365 is a user account within your organization’s tenant that does not have an active Microsoft 365 license assigned. While the account exists, it cannot access most Microsoft 365 services, such as Teams, Outlook, or OneDrive, until a license is allocated.

Key Characteristics of Unlicensed Users

• Limited Functionality:
• Unlicensed users cannot use paid services or apps, but they may still appear in the directory and can be assigned specific roles, such as guest users or service accounts.
• Not Deleted:
• An unlicensed account remains active unless explicitly disabled or removed by the admin.
• Temporary or Permanent State:
• Users may remain unlicensed temporarily (e.g., during onboarding) or permanently if their role does not require service access.

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Why Do Unlicensed Users Exist?

• License Optimization: Freeing up licenses for active users.
• Future Use : Keeping accounts available for reassignment.
• Directory Management: Retaining accounts for directory purposes without incurring costs.

How to Identify Unlicensed Users

Admins can use the Microsoft 365 Admin Center or PowerShell to identify unlicensed users. For example:

Get-MgUser -Filter 'assignedLicenses/$count eq 0' -ConsistencyLevel eventual -CountVariable unlicensedUserCount -All

How to Handle Unlicensed Users

• Reassign Licenses: Quickly allocate licenses to ensure users can access necessary services.
• Suspend or Remove Accounts: Disable or delete accounts that are no longer needed.
• Monitor Regularly: Schedule audits to prevent unnecessary accounts cluttering your tenant.

Managing unlicensed users efficiently is critical to optimizing costs and maintaining a secure and well-organized tenant. Start your review today!

Explore More

• Graph PowerShell Script to Identify Unlicensed Users