Retaining leaver's data in Microsoft 365 - Onedrive for business

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In most organisations, compliance with data retention policies is driven by statutory or legal requirements. By default, when a person disassociates from the company, email/One Drive for Business is retained for a month of deletion of the account. To avoid permanent deletion of the data after 30 day period, you can use Inactive mailbox or Shared mailbox features to forever keep the mailbox contents within the service (for FREE!), but OneDrive data needs to be handled manually (or automated by a separate process which is beyond the scope of this article). One Drive for Business data can be copied to SharePoint sites and kept for reference purpose.

Microsoft 365 Data retention policies can be customised to meet your specific business, legal requirements. Standard behaviour when a user is deleted from AD or unlicensed in O365 is you have 30 days to recover the mailbox and OneDrive content. SharePoint and Yammer data is not lost when the user leaves.

If you are synchronising your Active Directory (AD) with Azure AD by Azure AD Connect, you should consider populating the manager attribute in local AD. If you use accounts created directly in the Cloud, Manager can be set within the Office 365 Exchange Admin Center or Azure AD. With the manager attribute populated the users ‘manager’ is provided access to their OneDrive site contents automatically upon deletion of the account. They are notified by automatic emails as well  - one notification immediately upon deletion (i.e. 30 days before permanent deletion) and one a week before permanent deletion. They can decide if the content is worth keeping or not. If they need the contents, from within the OneDrive site, files and folders can be moved or copied to another SharePoint sites. Alternatively, they can 'sync' the location to a Windows machine using OneDrive sync client.

Version control is enabled by default for OneDrive and SharePoint. So, a user can go as far back as they want to assuming the version wasn’t deleted manually.
OneDrive keeps the deleted items in its recycle bin for a maximum 30 days. To restore deleted files from OneDrive in Windows 10, follow the instruction in below part.

STEP 1. Right-click OneDrive icon and select view online;
STEP 2. Sign in your OneDrive account on the OneDrive for business;
STEP 3. Click the Recycle Bin button on the left pane;

recover OneDrive deleted files from recycle bin within 30 days

STEP 4. All the deleted files and folders will be displayed on the right pane. To restore specific files or folders, pick them by selecting their checkbox; to restore all items, tap or click Restore all items.

NOTE: When you delete files on OneDrive using File Explorer, they're moved to your computer's desktop Recycle Bin. You can simply restore them from there unless you emptied Windows Recycle Bin or Recycle Bin is overflowing, by then old items would be removed automatically.

This page includes some details about OneDrive for Business site retention and deletion i.e. process followed when OneDrive site is deleted.

Note - 
Retention policies always take precedence to the standard OneDrive deletion process, so content included in a policy could be deleted before 30 days or retained for longer than the OneDrive retention. For more info, see Overview of retention policies. Likewise, if a OneDrive is put on hold as part of an eDiscovery case, managers and secondary owners will be sent email about the pending deletion, but the OneDrive won't be deleted until the hold is removed.

The retention period for cleanup of OneDrive begins when a user account is deleted from Azure Active Directory. No other action will cause the cleanup process to occur, including blocking the user from signing in or removing the user's license. For info about removing a user's license, see Remove licenses from users in Office 365 for business.

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