Identify and resolve license assignment problems for a group in Azure Active Directory

Group-based licensing in Azure Active Directory (Azure AD) introduces the concept of users in a licensing error state. In this article, we explain the reasons why users might end up in this state.

When you assign licenses directly to individual users, without using group-based licensing, the assignment operation might fail. For example, when you execute the PowerShell cmdlet Set-MsolUserLicense on a user system, the cmdlet can fail for many reasons that are related to business logic. For example, there might be an insufficient number of licenses or a conflict between two service plans that can't be assigned at the same time. The problem is immediately reported back to you.

When you're using group-based licensing, the same errors can occur, but they happen in the background while the Azure AD service is assigning licenses. For this reason, the errors can't be communicated to you immediately. Instead, they're recorded on the user object and then reported via the administrative portal. The original intent to license the user is never lost, but it's recorded in an error state for future investigation and resolution.

How to find license assignment errors

To find license assignment errors

  1. To find users in an error state in a specific group, open the pane for the group. Under Licenses, a notification appears if there are any users in an error state.

    Group, error notification

  2. Select the notification to open a list of all affected users. You can select each user individually to see more details.

    Group, list of users in error state

  3. To find all groups that contain at least one error, on the Azure Active Directory blade select Licenses, and then select Overview. An information box is displayed when groups require your attention.

    Overview, information about groups in error state

  4. Select the box to see a list of all groups with errors. You can select each group for more details.

    Overview, list of groups with errors

The following sections give a description of each potential problem and the way to resolve it.

Not enough licenses

Problem: There aren't enough available licenses for one of the products that's specified in the group. You need to either purchase more licenses for the product or free up unused licenses from other users or groups.

To see how many licenses are available, go to Azure Active Directory > Licenses > All products.

To see which users and groups are consuming licenses, select a product. Under Licensed users, you see a list of all users who have had licenses assigned directly or via one or more groups. Under Licensed groups, you see all groups that have that products assigned.

PowerShell: PowerShell cmdlets report this error as CountViolation.

Conflicting service plans

Problem: One of the products that's specified in the group contains a service plan that conflicts with another service plan that's already assigned to the user via a different product. Some service plans are configured in a way that they can't be assigned to the same user as another, related service plan.

Consider the following example. A user has a license for Office 365 Enterprise E1 assigned directly, with all the plans enabled. The user has been added to a group that has the Office 365 Enterprise E3 product assigned to it. The E3 product contains service plans that can't overlap with the plans that are included in E1, so the group license assignment fails with the “Conflicting service plans” error. In this example, the conflicting service plans are:

  • SharePoint Online (Plan 2) conflicts with SharePoint Online (Plan 1).
  • Exchange Online (Plan 2) conflicts with Exchange Online (Plan 1).

To solve this conflict, you need to disable two of the plans. You can disable the E1 license that's directly assigned to the user. Or, you need to modify the entire group license assignment and disable the plans in the E3 license. Alternatively, you might decide to remove the E1 license from the user if it's redundant in the context of the E3 license.

The decision about how to resolve conflicting product licenses always belongs to the administrator. Azure AD doesn't automatically resolve license conflicts.

PowerShell: PowerShell cmdlets report this error as MutuallyExclusiveViolation.

Other products depend on this license

Problem: One of the products that's specified in the group contains a service plan that must be enabled for another service plan, in another product, to function. This error occurs when Azure AD attempts to remove the underlying service plan. For example, this can happen when you remove the user from the group.

To solve this problem, you need to make sure that the required plan is still assigned to users through some other method or that the dependent services are disabled for those users. After doing that, you can properly remove the group license from those users.

PowerShell: PowerShell cmdlets report this error as DependencyViolation.

Usage location isn't allowed

Problem: Some Microsoft services aren't available in all locations because of local laws and regulations. Before you can assign a license to a user, you must specify the Usage location property for the user. You can specify the location under the User > Profile > Settings section in the Azure portal.

When Azure AD attempts to assign a group license to a user whose usage location isn't supported, it fails and records an error on the user.

To solve this problem, remove users from nonsupported locations from the licensed group. Alternatively, if the current usage location values don't represent the actual user location, you can modify them so that the licenses are correctly assigned next time (if the new location is supported).

PowerShell: PowerShell cmdlets report this error as ProhibitedInUsageLocationViolation.


When Azure AD assigns group licenses, any users without a specified usage location inherit the location of the directory. We recommend that administrators set the correct usage location values on users before using group-based licensing to comply with local laws and regulations.

What happens when there's more than one product license on a group?

You can assign more than one product license to a group. For example, you can assign Office 365 Enterprise E3 and Enterprise Mobility + Security to a group to easily enable all included services for users.

Azure AD attempts to assign all licenses that are specified in the group to each user. If Azure AD can't assign one of the products because of business logic problems, it won't assign the other licenses in the group either. An example is if there aren't enough licenses for all, or if there are conflicts with other services that are enabled on the user.

You can see the users who failed to get assigned and check which products are affected by this problem.

How do you manage licenses for products with prerequisites?

Some Microsoft Online products you might own are add-ons. Add-ons require a prerequisite service plan to be enabled for a user or a group before they can be assigned a license. With group-based licensing, the system requires that both the prerequisite and add-on service plans be present in the same group. This is done to ensure that any users who are added to the group can receive the fully working product. Let's consider the following example:

Microsoft Workplace Analytics is an add-on product. It contains a single service plan with the same name. We can only assign this service plan to a user, or group, when one of the following prerequisites is also assigned:

  • Exchange Online (Plan 1)
  • Exchange Online (Plan 2)

If we try to assign this product on its own to a group, the portal returns an error. Selecting the error notification shows the following details:

Group, prerequisite missing

If we select the details, it shows the following error message:

License operation failed. Make sure that the group has necessary services before adding or removing a dependent service. The service Microsoft Workplace Analytics requires Exchange Online (Plan 2) to be enabled as well.

To assign this add-on license to a group, we must ensure that the group also contains the prerequisite service plan. For example, we might update an existing group that already contains the full Office 365 E3 product, and then add the add-on product to it.

It is also possible to create a standalone group that contains only the minimum required products to make the add-on work. It can be used to license only the selected users for the add-on product. In this example, we have assigned the following products to the same group:

  • Office 365 Enterprise E3 with only the Exchange Online (Plan 2) service plan enabled
  • Microsoft Workplace Analytics

Group, prerequisite included

From now on, any users added to this group consume one license of the E3 product and one license of the Workplace Analytics product. At the same time, those users can be members of another group that gives them the full E3 product, and they still consume only one license for that product.


You can create multiple groups for each prerequisite service plan. For example, if you use both Office 365 Enterprise E1 and Office 365 Enterprise E3 for your users, you can create two groups to license Microsoft Workplace Analytics: one that uses E1 as a prerequisite and the other that uses E3. This lets you distribute the add-on to E1 and E3 users without consuming additional licenses.

License assignment fails silently for a user due to duplicate proxy addresses in Exchange Online

If you use Exchange Online, some users in your tenant might be incorrectly configured with the same proxy address value. When group-based licensing tries to assign a license to such a user, it fails and does not record an error. The failure to record the error in this instance is a limitation in the preview version of this feature, and we are going to address it before General Availability.


If you notice that some users did not receive a license and there is no error recorded for those users, first check if they have a duplicate proxy address. To see if there is a duplicate proxy address, execute the following PowerShell cmdlet against Exchange Online:

Run Get-Recipient | where {$_.EmailAddresses -match ""} | fL Name, RecipientType,emailaddresses

For more information about this problem, see "Proxy address is already being used" error message in Exchange Online. The article also includes information on how to connect to Exchange Online by using remote PowerShell.

After you resolve any proxy address problems for the affected users, make sure to force license processing on the group to make sure that the licenses can now be applied.

How do you force license processing in a group to resolve errors?

Depending on what steps you've taken to resolve the errors, it might be necessary to manually trigger the processing of a group to update the user state.

For example, if you free up some licenses by removing direct license assignments from users, you need to trigger the processing of groups that previously failed to fully license all user members. To reprocess a group, go to the group pane, open Licenses, and then select the Reprocess button on the toolbar.

Next steps

To learn more about other scenarios for license management through groups, see the following: