To assign your retention settings to content, use retention policies and retention labels with label policies. You can use just one of these methods, or combine them.

Use a retention policy to assign the same retention settings for content at a site or mailbox level, and use a retention label to assign retention settings at an item level (folder, document, email).

For example, if all documents in a SharePoint site should be retained for 5 years, it's more efficient to do this with a retention policy than apply the same retention label to all documents in that site. However, if some documents in that site should be retained for 5 years and others retained for 10 years, a retention policy wouldn't be able to do this. When you need to specify retention settings at the item level, use retention labels.

Unlike retention policies, retention settings from retention labels travel with the content if it's moved to a different location within your Microsoft 365 tenant. In addition, retention labels have the following capabilities that retention policies don't support:

  • Options to start the retention period from when the content was labeled or based on an event, in addition to the age of the content or when it was last modified.

  • Use trainable classifiers to identify content to label.

  • Apply a default label for SharePoint items or Exchange messages.

  • Supported actions at the end retention period:

    • Disposition review to review the content before it's permanently deleted.
    • Automatically apply another retention label
  • Mark the content as a record as part of the label settings, and always have proof of disposition when content is deleted at the end of its retention period.