The user administrator in Office 365 has the responsibility of creating and removing user accounts.
A key to remember is that once a license is removed from a user account, all the information pertaining to that license gets deleted. For example if the user admin removes a license for Exchange, then all the mails in the inbox and the outbox get deleted.
One should remove accounts only for people who are no longer working in the organization. In case a license is removed from an existing user, it’s very difficult to recover the data.