Are Retention Policies replacing In-Place Holds and Litigation Holds?

If I am reading this right, In-Place Holds are deprecated effectively and not to be used, this function won't work by early next year at the latest, though customers that have used this function already will still be supported.  Instead, the use of Litigation Holds and Office 365 retention policies is the way to do this:

"We've postponed the July 1, 2017 deadline for creating new In-Place Holds to make a mailbox inactive. But later this year or early next year, you won't be able to create new In-Place Holds in Exchange Online. At that time, only Litigation Holds and Office 365 retention policies can be used to create an inactive mailbox. However, existing inactive mailboxes that are on In-Place Hold will still be supported, and you can continue to manage the In-Place Holds on inactive mailboxes. This includes changing the duration of an In-Place Hold and permanently deleting an inactive mailbox by removing the In-Place Hold."

This article has the steps to make a  mailbox inactive for staff that are leaving (a way to retain the mailbox data for as long as needed, while deleting the mailbox and recovering the licence) with either Litigation Hold or apply an Office 365 retention policy.  Though in your case you probably are not deleting the actual mailbox if it's for ongoing users.

https://support.office.com/en-us/article/Manage-inactive-mailboxes-in-Office-365-296a02bd-ebde-4022-900e-547acf38ddd7

https://technet.microsoft.com/library/dn743673(v=exchg.150).aspx

Not sure if that's helped at all but it get's you started and some other members will probably chime in.