There are several reasons you may want to exclude a SharePoint Site from a Retention Policy in Office 365, some of which I cover in 3 Ways Retention Policies in SharePoint Online Ruin User Experience. This guide will show you how to exclude a SharePoint Site from a Retention Policy using both the Compliance Center and PowerShell. For both methods you will need to have the necessary permissions in Security & Compliance Center.
Compliance Center
To exclude a SharePoint Site using the Compliance Center you will need to navigate to the Admin Console at https://protection.office.com.
In the left navigation bar, navigate to Information Governance > Retention. You will then be presented with all the Retention Policies configured in your tenant.
Select the policy you wish to edit and click ‘Edit Policy’.
On the Edit Retention Policy window, navigate to ‘Locations Applied’, select ‘Let me choose specific locations’ if not already selected.
Next to SharePoint Sites, click ‘Exclude Sites’ as seen below.
Once loaded, click the Exclude Sites Button.
Enter the URL of the Site you wish to exclude and click the ‘+’ button.
Select the Site by checking the checkbox. You can add other sites at this point if you want to.
Once you have selected all the Sites you want to exclude, click the ‘Exclude’ button at the bottom of the window to confirm the changes.
Your Site is now excluded from the Retention Policy!
PowerShell
To exclude a SharePoint Site using PowerShell you first need to connect to Office 365 Security & Compliance Center PowerShell.
Once you are connected, you can run the following command, being sure to change the URL to the Site you want to exclude and the Identity to be the Name or GUID of the Retention Policy.
Set-RetentionCompliancePolicy -AddSharePointLocationException https://mytenant.sharepoint.com/sites/Brand -Identity Sensitivity
You can also exclude multiple sites by separating the URLs with a comma, as I have done below:
Set-RetentionCompliancePolicy -AddSharePointLocationException https://mytenant.sharepoint.com/sites/Branding,https://mytenant.sharepoint.com/sites/HR -Identity Sensitivity