Retention Policy vs. Litigation Hold vs. Archiving in Exchange Online

11 Apr 2025

8 min read

Ragavarshini

Article at a glance

Microsoft 365’s retention policies, litigation hold, and archiving features are essential but come with limitations that could result in data loss.

Retention policies help ensure data is retained or deleted according to compliance needs but require careful configuration and scoping to avoid gaps.

Litigation Holds are primarily legal tools designed to preserve data in its original state during investigations or lawsuits, not for routine data recovery or backup.

‘Archiving’, ‘retention policies’, and ‘litigation holds’ are different terms related to Exchange Online data retention, and administrators should be aware of when to use what.

In this article, we discuss in detail how retention policies, litigation holds, and archive mailboxes are different from each other, and explain how they should be used.

Retention policies and labels

Retention policies and labels in Microsoft 365 are essential tools to manage business information, meet regulatory compliance requirements, and reduce the risk of data loss. These features are part of a broader information governance strategy that spans various data types including Exchange Online mailboxes, Microsoft Teams chats, SharePoint sites, and OneDrive accounts.

Retention policies are created in the Microsoft Purview Compliance Portal and can be applied organization-wide or scoped to specific users, groups, or locations. Admins can define whether content should be retained, deleted, or retained for a specific duration before deletion. Retention can be triggered based on content creation, modification, labeling, or event-based conditions.

Retention labels can be applied manually by users or automatically based on specific conditions such as content type, keywords, or sensitive information. Labels can also classify content as records to prevent changes or deletion.

Note: Microsoft uses the term ‘retention policies’ in various contexts. In this article, retention policies and labels refer to the new Microsoft 365 retention policy features available in the Compliance Center.

To know more about Microsoft 365 retention policies and labels, click here.

Litigation holds

Litigation Hold in Microsoft 365 allows administrators to preserve all mailbox content, including deleted items and original versions of modified items, for compliance and legal investigations. As an eDiscovery feature in Exchange Online, it applies to both the user's primary and archive mailboxes (if enabled). Litigation Holds must be manually applied to individual mailboxes and can be configured for a specific duration or set to retain content indefinitely. When enabled, deleted and modified items are retained in the Recoverable Items folder, whose storage quota increases to accommodate the preserved data.

Click here to know more about litigation holds in Microsoft 365.

Archiving

In Microsoft 365, archive mailboxes refer to the additional mailbox storage space provided to users.

The primary intent for using archive mailboxes is for users to move data that they no longer use currently to a secondary mailbox. This helps save storage costs associated with the primary mailboxes.

After the archive mailbox is enabled, up to 100 GB of additional storage is available per user. Once the limit is reached, users can make use of a feature called auto-expanding archiving (also called unlimited archiving) that provides additional storage in the archive without contacting Microsoft. However, there is a limit of 1.5 TB to the auto-expanded archive.

For step-by-step instructions on how to turn on auto-expanding archiving, click here.

To understand unlimited archiving in detail, click here.