diff --git a/webapp/channels/src/components/admin_console/license_settings/__snapshots__/license_settings.test.tsx.snap b/webapp/channels/src/components/admin_console/license_settings/__snapshots__/license_settings.test.tsx.snap
index ec0e06b16c..1de52df271 100644
--- a/webapp/channels/src/components/admin_console/license_settings/__snapshots__/license_settings.test.tsx.snap
+++ b/webapp/channels/src/components/admin_console/license_settings/__snapshots__/license_settings.test.tsx.snap
@@ -19,6 +19,22 @@ exports[`components/admin_console/license_settings/LicenseSettings load screen a
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -123,6 +139,22 @@ exports[`components/admin_console/license_settings/LicenseSettings load screen w
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -227,6 +259,22 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E10",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -362,6 +410,22 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -485,6 +549,22 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "enterprise",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -608,6 +688,22 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -731,6 +827,22 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -854,6 +966,22 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -977,6 +1105,18 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1617714643650",
+              "StartsAt": "1617714643650",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <TrialLicenseCard
           license={
             Object {
@@ -1078,6 +1218,15 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "IsLicensed": "false",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <Component
           enterpriseReady={true}
           gettingTrial={false}
@@ -1190,6 +1339,15 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "IsLicensed": "false",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <Component
           enterpriseReady={true}
           gettingTrial={false}
@@ -1302,6 +1460,22 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620335443650",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
@@ -1406,6 +1580,15 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "IsLicensed": "false",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <Component
           enterpriseReady={false}
           gettingTrial={false}
@@ -1519,7 +1702,17 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
     >
       <div
         className="admin-console__banner_section"
-      />
+      >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "IsLicensed": "false",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
+      </div>
       <div
         className="top-wrapper"
       >
@@ -1616,7 +1809,25 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
     >
       <div
         className="admin-console__banner_section"
-      />
+      >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Cloud": "true",
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620993600000",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
+      </div>
       <div
         className="top-wrapper"
       >
@@ -1725,6 +1936,22 @@ exports[`components/admin_console/license_settings/LicenseSettings should match
       <div
         className="admin-console__banner_section"
       >
+        <UserSeatAlertBanner
+          license={
+            Object {
+              "Company": "Mattermost Inc.",
+              "ExpiresAt": "1620993600000",
+              "IsLicensed": "true",
+              "IssuedAt": "1517714643650",
+              "Name": "LicenseName",
+              "SkuShortName": "E20",
+              "StartsAt": "1517714643650",
+              "Users": "100",
+            }
+          }
+          location="license_settings"
+          totalUsers={10}
+        />
         <RenewLicenseCard
           isLicenseExpired={false}
           license={
diff --git a/webapp/channels/src/components/admin_console/license_settings/enterprise_edition/enterprise_edition_left_panel.test.tsx b/webapp/channels/src/components/admin_console/license_settings/enterprise_edition/enterprise_edition_left_panel.test.tsx
index dc7184e212..5fc2fc8b04 100644
--- a/webapp/channels/src/components/admin_console/license_settings/enterprise_edition/enterprise_edition_left_panel.test.tsx
+++ b/webapp/channels/src/components/admin_console/license_settings/enterprise_edition/enterprise_edition_left_panel.test.tsx
@@ -14,7 +14,7 @@ import mergeObjects from 'packages/mattermost-redux/test/merge_objects';
 import {mountWithIntl} from 'tests/helpers/intl-test-helper';
 import {renderWithContext, screen} from 'tests/react_testing_utils';
 import mockStore from 'tests/test_store';
-import {OverActiveUserLimits, SelfHostedProducts} from 'utils/constants';
+import {SelfHostedProducts} from 'utils/constants';
 import {TestHelper} from 'utils/test_helper';
 
 import EnterpriseEditionLeftPanel from './enterprise_edition_left_panel';
@@ -132,30 +132,9 @@ describe('components/admin_console/license_settings/enterprise_edition/enterpris
         expect(screen.getByText('ACTIVE USERS:')).not.toHaveClass('legend--over-seats-purchased');
     });
 
-    test('should add warning class to active users', () => {
-        const minWarning = Math.ceil(parseInt(license.Users, 10) * OverActiveUserLimits.MIN) + parseInt(license.Users, 10);
-        const props = {
-            ...baseProps,
-            statsActiveUsers: minWarning,
-        };
-
-        renderWithContext(
-            <EnterpriseEditionLeftPanel
-                {...props}
-            />,
-            initialState,
-        );
-
-        expect(screen.getByText(Intl.NumberFormat('en').format(minWarning))).toHaveClass('value');
-        expect(screen.getByText(Intl.NumberFormat('en').format(minWarning))).toHaveClass('value--warning-over-seats-purchased');
-        expect(screen.getByText(Intl.NumberFormat('en').format(minWarning))).not.toHaveClass('value--over-seats-purchased');
-        expect(screen.getByText('ACTIVE USERS:')).toHaveClass('legend');
-        expect(screen.getByText('ACTIVE USERS:')).toHaveClass('legend--warning-over-seats-purchased');
-        expect(screen.getByText('ACTIVE USERS:')).not.toHaveClass('legend--over-seats-purchased');
-    });
-
     test('should add over-seats-purchased class to active users', () => {
-        const exceedHighLimitExtraUsersError = Math.ceil(parseInt(license.Users, 10) * OverActiveUserLimits.MAX) + parseInt(license.Users, 10);
+        // Changed to not use the constant OverActiveUserLimits.MAX given that we are currently set to 0. So the active users will be 0
+        const exceedHighLimitExtraUsersError = Math.ceil(parseInt(license.Users, 10) * 0.2) + parseInt(license.Users, 10);
         const props = {
             ...baseProps,
             statsActiveUsers: exceedHighLimitExtraUsersError,
diff --git a/webapp/channels/src/components/admin_console/license_settings/license_settings.tsx b/webapp/channels/src/components/admin_console/license_settings/license_settings.tsx
index b3aac51e8a..0a8e228953 100644
--- a/webapp/channels/src/components/admin_console/license_settings/license_settings.tsx
+++ b/webapp/channels/src/components/admin_console/license_settings/license_settings.tsx
@@ -34,6 +34,7 @@ import TeamEditionLeftPanel from './team_edition/team_edition_left_panel';
 import TeamEditionRightPanel from './team_edition/team_edition_right_panel';
 import TrialBanner from './trial_banner/trial_banner';
 import TrialLicenseCard from './trial_license_card/trial_license_card';
+import UserSeatAlertBanner from './user_seat_alert_banner';
 
 import './license_settings.scss';
 
@@ -354,6 +355,11 @@ export default class LicenseSettings extends React.PureComponent<Props, State> {
                 <div className='admin-console__wrapper'>
                     <div className='admin-console__content'>
                         <div className='admin-console__banner_section'>
+                            <UserSeatAlertBanner
+                                license={license}
+                                totalUsers={this.props.totalUsers}
+                                location='license_settings'
+                            />
                             {!this.state.clickNormalUpgradeBtn && license.IsLicensed !== 'true' &&
                                 this.props.prevTrialLicense?.IsLicensed !== 'true' &&
                                 <TrialBanner
diff --git a/webapp/channels/src/components/admin_console/license_settings/user_seat_alert_banner.tsx b/webapp/channels/src/components/admin_console/license_settings/user_seat_alert_banner.tsx
new file mode 100644
index 0000000000..7230b0ff4c
--- /dev/null
+++ b/webapp/channels/src/components/admin_console/license_settings/user_seat_alert_banner.tsx
@@ -0,0 +1,156 @@
+// Copyright (c) 2015-present Mattermost, Inc. All Rights Reserved.
+// See LICENSE.txt for license information.
+
+import React, {useState, useEffect} from 'react';
+import {FormattedMessage, useIntl} from 'react-intl';
+import {useDispatch, useSelector} from 'react-redux';
+
+import type {ClientLicense} from '@mattermost/types/config';
+
+import {savePreferences} from 'mattermost-redux/actions/preferences';
+import {get as selectPreference} from 'mattermost-redux/selectors/entities/preferences';
+import {getCurrentUser} from 'mattermost-redux/selectors/entities/users';
+
+import ExternalLink from 'components/external_link';
+
+import {Preferences, LicenseLinks} from 'utils/constants';
+
+import type {GlobalState} from 'types/store';
+
+import AlertBanner from '../../alert_banner';
+
+export interface UserSeatAlertBannerProps {
+    license: ClientLicense;
+    totalUsers: number;
+    location: 'license_settings' | 'system_statistics';
+}
+
+const UserSeatAlertBanner: React.FC<UserSeatAlertBannerProps> = ({license, totalUsers, location}) => {
+    const {formatMessage} = useIntl();
+    const dispatch = useDispatch();
+    const currentUser = useSelector(getCurrentUser);
+
+    const getPreferenceName = (percentUsed: number) => {
+        if (percentUsed < 90) {
+            return '';
+        }
+
+        const locationSuffix = location === 'license_settings' ? 'license_settings' : 'system_statistics';
+        if (percentUsed >= 100) {
+            return `100_seat_${locationSuffix}`;
+        } else if (percentUsed >= 95) {
+            return `95_seat_${locationSuffix}`;
+        }
+        return `90_seat_${locationSuffix}`;
+    };
+
+    const calculatePercentUsed = () => {
+        if (!license || !license.Users) {
+            return 0;
+        }
+        const licensedUsers = parseInt(license.Users, 10);
+
+        if (!licensedUsers || licensedUsers === 0) {
+            return 0;
+        }
+        return (totalUsers / licensedUsers) * 100;
+    };
+
+    const percentUsed = calculatePercentUsed();
+    const preferenceName = getPreferenceName(percentUsed);
+    const dismissed = useSelector((state: GlobalState) => selectPreference(state, Preferences.CATEGORY_SYSTEM_NOTICE, preferenceName, 'false'));
+    const [visible, setVisible] = useState(dismissed === 'false');
+
+    useEffect(() => {
+        setVisible(dismissed === 'false');
+    }, [dismissed]);
+
+    const handleDismiss = () => {
+        setVisible(false);
+
+        dispatch(savePreferences(currentUser.id, [{
+            user_id: currentUser.id,
+            category: Preferences.CATEGORY_SYSTEM_NOTICE,
+            name: preferenceName,
+            value: 'true',
+        }]));
+    };
+
+    if (!visible || !license || !license.Users || percentUsed < 90) {
+        return null;
+    }
+
+    let mode: 'success' | 'info' | 'danger' = 'info';
+    let title: React.ReactNode = null;
+    let message: React.ReactNode = null;
+
+    if (percentUsed >= 90 && percentUsed < 95) {
+        mode = 'success';
+        title = (
+            <FormattedMessage
+                id='admin.license.userSeatAlert.successTitle'
+                defaultMessage='Your workspace has reached 90% of your licensed seats'
+            />
+        );
+        message = (
+            <FormattedMessage
+                id='admin.license.userSeatAlert.successMessage'
+                defaultMessage='Congratulations! Platform adoption is strong across your organization. To ensure uninterrupted growth, our team can assist in scaling your license to meet operational requirements.'
+            />
+        );
+    } else if (percentUsed >= 95 && percentUsed < 100) {
+        mode = 'info';
+        title = (
+            <FormattedMessage
+                id='admin.license.userSeatAlert.infoTitle'
+                defaultMessage='Your workspace has reached 95% of your licensed seats'
+            />
+        );
+        message = (
+            <FormattedMessage
+                id='admin.license.userSeatAlert.infoMessage'
+                defaultMessage='Your organization is approaching full license utilization. Now is a good time to assess future needs and align usage with procurement planning. Contact us to explore available options.'
+            />
+        );
+    } else if (percentUsed >= 100) {
+        mode = 'danger';
+        title = (
+            <FormattedMessage
+                id='admin.license.userSeatAlert.dangerTitle'
+                defaultMessage='Your workspace has reached 100% of your licensed seats'
+            />
+        );
+        message = (
+            <FormattedMessage
+                id='admin.license.userSeatAlert.dangerMessage'
+                defaultMessage='All licensed seats are now in use. Additional users may result in true-up charges at your next renewal. To maintain compliance and uninterrupted access, you may limit new sign-ups, or contact us to extend your license.'
+            />
+        );
+    }
+
+    const actionButtonLeft = (
+        <ExternalLink
+            href={LicenseLinks.CONTACT_SALES}
+            location='license_settings_user_seat_alert'
+            className='style-button AlertBanner__buttonLeft'
+        >
+            <FormattedMessage
+                id='admin.license.userSeatAlert.contactSales'
+                defaultMessage='Contact Sales'
+            />
+        </ExternalLink>
+    );
+
+    return (
+        <AlertBanner
+            mode={mode}
+            title={title}
+            message={message}
+            actionButtonLeft={actionButtonLeft}
+            onDismiss={handleDismiss}
+            closeBtnTooltip={formatMessage({id: 'admin.license.userSeatAlert.closeBtnTooltip', defaultMessage: 'Dismiss'})}
+        />
+    );
+};
+
+export default UserSeatAlertBanner;
diff --git a/webapp/channels/src/components/alert_banner/alert_banner.scss b/webapp/channels/src/components/alert_banner/alert_banner.scss
index 0113d7e89c..3c6325d364 100644
--- a/webapp/channels/src/components/alert_banner/alert_banner.scss
+++ b/webapp/channels/src/components/alert_banner/alert_banner.scss
@@ -49,7 +49,8 @@
 }
 
 .AlertBanner__actionButtons {
-    margin-top: 12px;
+    margin-top: 20px;
+    margin-bottom: 16px;
     font-family: 'Open Sans';
 
     .AlertBanner__buttonLeft {
diff --git a/webapp/channels/src/components/analytics/activated_users_card/index.tsx b/webapp/channels/src/components/analytics/activated_users_card/index.tsx
index e93a57d632..e9266ce8e7 100644
--- a/webapp/channels/src/components/analytics/activated_users_card/index.tsx
+++ b/webapp/channels/src/components/analytics/activated_users_card/index.tsx
@@ -53,7 +53,7 @@ const ActivatedUserCard = ({activatedUsers, seatsPurchased, isCloud}: ActivatedU
                 />
                 <FormattedMessage
                     id='analytics.team.overageUsersSeats'
-                    defaultMessage='This exceeds total paid seats'
+                    defaultMessage='This exceeds total licensed seats'
                 >
                     {(text) => <span>{text}</span>}
                 </FormattedMessage>
diff --git a/webapp/channels/src/components/analytics/system_analytics/system_analytics.tsx b/webapp/channels/src/components/analytics/system_analytics/system_analytics.tsx
index 34a8da0f4a..458e670038 100644
--- a/webapp/channels/src/components/analytics/system_analytics/system_analytics.tsx
+++ b/webapp/channels/src/components/analytics/system_analytics/system_analytics.tsx
@@ -12,6 +12,7 @@ import {getFormattedFileSize} from 'mattermost-redux/utils/file_utils';
 
 import * as AdminActions from 'actions/admin_actions.jsx';
 
+import UserSeatAlertBanner from 'components/admin_console/license_settings/user_seat_alert_banner';
 import ActivatedUserCard from 'components/analytics/activated_users_card';
 import ExternalLink from 'components/external_link';
 import AdminHeader from 'components/widgets/admin_console/admin_header';
@@ -510,6 +511,11 @@ export default class SystemAnalytics extends React.PureComponent<Props, State> {
                 </AdminHeader>
                 <div className='admin-console__wrapper'>
                     <div className='admin-console__content'>
+                        <UserSeatAlertBanner
+                            license={this.props.license}
+                            totalUsers={this.getStatValue(stats[StatTypes.TOTAL_USERS]) || 0}
+                            location='system_statistics'
+                        />
                         {banner}
                         <div className='grid-statistics'>
                             {systemCards}
diff --git a/webapp/channels/src/components/announcement_bar/overage_users_banner/index.tsx b/webapp/channels/src/components/announcement_bar/overage_users_banner/index.tsx
index 735eca64b7..4c0b271ada 100644
--- a/webapp/channels/src/components/announcement_bar/overage_users_banner/index.tsx
+++ b/webapp/channels/src/components/announcement_bar/overage_users_banner/index.tsx
@@ -27,15 +27,10 @@ import './overage_users_banner.scss';
 type AdminHasDismissedItArgs = {
     preferenceName: string;
     overagePreferences: PreferenceType[];
-    isWarningBanner: boolean;
 }
 
-const adminHasDismissed = ({preferenceName, overagePreferences, isWarningBanner}: AdminHasDismissedItArgs): boolean => {
-    if (isWarningBanner) {
-        return overagePreferences.find((value) => value.name === preferenceName) !== undefined;
-    }
-
-    return false;
+const adminHasDismissed = ({preferenceName, overagePreferences}: AdminHasDismissedItArgs): boolean => {
+    return overagePreferences.find((value) => value.name === preferenceName) !== undefined;
 };
 
 const OverageUsersBanner = () => {
@@ -62,7 +57,7 @@ const OverageUsersBanner = () => {
 
     const overageByUsers = activeUsers - seatsPurchased;
 
-    const isOverageState = isBetween5PercerntAnd10PercentPurchasedSeats || isOver10PercerntPurchasedSeats;
+    const isOverageState = overageByUsers > 0 && (isBetween5PercerntAnd10PercentPurchasedSeats || isOver10PercerntPurchasedSeats);
     const hasPermission = isAdmin && isOverageState && !isCloud;
     const {
         cta,
@@ -89,14 +84,14 @@ const OverageUsersBanner = () => {
 
     const handleClick = handleContactSalesClick;
 
-    if (!hasPermission || adminHasDismissed({isWarningBanner: isBetween5PercerntAnd10PercentPurchasedSeats, overagePreferences, preferenceName})) {
+    if (!hasPermission || adminHasDismissed({overagePreferences, preferenceName})) {
         return null;
     }
 
     const message = (
         <FormattedMessage
             id='licensingPage.overageUsersBanner.text'
-            defaultMessage='(Only visible to admins) Your workspace user count has exceeded your paid license seat count by {seats, number} {seats, plural, one {seat} other {seats}}. Purchase additional seats to remain compliant.'
+            defaultMessage='(Only visible to admins) The user count exceeds the number of licensed seats by {seats, number} {seats, plural, one {seat} other {seats}}. Purchase more seats to stay compliant.'
             values={{
                 seats: overageByUsers,
             }}
@@ -105,7 +100,7 @@ const OverageUsersBanner = () => {
     return (
         <AnnouncementBar
             type={isBetween5PercerntAnd10PercentPurchasedSeats ? AnnouncementBarTypes.ADVISOR : AnnouncementBarTypes.CRITICAL}
-            showCloseButton={isBetween5PercerntAnd10PercentPurchasedSeats}
+            showCloseButton={true}
             onButtonClick={handleClick}
             modalButtonText={cta}
             message={message}
diff --git a/webapp/channels/src/components/announcement_bar/overage_users_banner/overage_users_banner.test.tsx b/webapp/channels/src/components/announcement_bar/overage_users_banner/overage_users_banner.test.tsx
index 6278a06e46..f03b6711ae 100644
--- a/webapp/channels/src/components/announcement_bar/overage_users_banner/overage_users_banner.test.tsx
+++ b/webapp/channels/src/components/announcement_bar/overage_users_banner/overage_users_banner.test.tsx
@@ -39,12 +39,12 @@ jest.mock('actions/telemetry_actions', () => ({
 const seatsPurchased = 40;
 const email = 'test@mattermost.com';
 
-const seatsMinimumFor5PercentageState = (Math.ceil(seatsPurchased * OverActiveUserLimits.MIN)) + seatsPurchased;
+const seatsMinimumFor5PercentageState = (Math.ceil(seatsPurchased * OverActiveUserLimits.MIN)) + seatsPurchased + 1;
 
-const seatsMinimumFor10PercentageState = (Math.ceil(seatsPurchased * OverActiveUserLimits.MAX)) + seatsPurchased;
+const seatsMinimumFor10PercentageState = (Math.ceil(seatsPurchased * OverActiveUserLimits.MAX)) + seatsPurchased + 1;
 
-const text5PercentageState = `(Only visible to admins) Your workspace user count has exceeded your paid license seat count by ${seatsMinimumFor5PercentageState - seatsPurchased} seats. Purchase additional seats to remain compliant.`;
-const text10PercentageState = `(Only visible to admins) Your workspace user count has exceeded your paid license seat count by ${seatsMinimumFor10PercentageState - seatsPurchased} seats. Purchase additional seats to remain compliant.`;
+const text5PercentageState = `(Only visible to admins) The user count exceeds the number of licensed seats by ${seatsMinimumFor5PercentageState - seatsPurchased} seat. Purchase more seats to stay compliant.`;
+const text10PercentageState = `(Only visible to admins) The user count exceeds the number of licensed seats by ${seatsMinimumFor10PercentageState - seatsPurchased} seat. Purchase more seats to stay compliant.`;
 
 const contactSalesTextLink = 'Contact Sales';
 
@@ -127,7 +127,7 @@ describe('components/overage_users_banner', () => {
     it('should not render the banner because we are not on overage state', () => {
         renderWithContext(<OverageUsersBanner/>);
 
-        expect(screen.queryByText('(Only visible to admins) Your workspace user count has exceeded your paid license seat count by', {exact: false})).not.toBeInTheDocument();
+        expect(screen.queryByText('(Only visible to admins) The user count exceeds the number of licensed seats by', {exact: false})).not.toBeInTheDocument();
     });
 
     it('should not render the banner because we are not admins', () => {
@@ -146,7 +146,7 @@ describe('components/overage_users_banner', () => {
 
         renderWithContext(<OverageUsersBanner/>, store);
 
-        expect(screen.queryByText('Your workspace user count has exceeded your paid license seat count by', {exact: false})).not.toBeInTheDocument();
+        expect(screen.queryByText('Your workspace user count has exceeded your licensed seat count by', {exact: false})).not.toBeInTheDocument();
     });
 
     it('should not render the banner because it\'s cloud licenese', () => {
@@ -159,7 +159,7 @@ describe('components/overage_users_banner', () => {
 
         renderWithContext(<OverageUsersBanner/>, store);
 
-        expect(screen.queryByText('Your workspace user count has exceeded your paid license seat count by', {exact: false})).not.toBeInTheDocument();
+        expect(screen.queryByText('Your workspace user count has exceeded your licensed seat count by', {exact: false})).not.toBeInTheDocument();
     });
 
     it('should not render the 5% banner because we have dissmised it', () => {
@@ -170,7 +170,7 @@ describe('components/overage_users_banner', () => {
                 {
                     category: Preferences.OVERAGE_USERS_BANNER,
                     value: 'Overage users banner watched',
-                    name: `warn_overage_seats_${licenseId.substring(0, 8)}`,
+                    name: `error_overage_seats_${licenseId.substring(0, 8)}`,
                 },
             ],
         );
@@ -230,7 +230,7 @@ describe('components/overage_users_banner', () => {
         const salesLinkWithEncodedParams = 'https://mattermost.com/contact-sales/?qk=&qp=&qw=&qx=dGVzdEBtYXR0ZXJtb3N0LmNvbQ==&utm_source=mattermost&utm_medium=in-product';
         expect(windowSpy).toBeCalledWith(salesLinkWithEncodedParams, '_blank');
         expect(trackEvent).toBeCalledTimes(1);
-        expect(trackEvent).toBeCalledWith('insights', 'click_true_up_warning', {
+        expect(trackEvent).toBeCalledWith('insights', 'click_true_up_error', {
             cta: 'Contact Sales',
             banner: 'global banner',
         });
@@ -248,7 +248,7 @@ describe('components/overage_users_banner', () => {
                 {
                     category: Preferences.OVERAGE_USERS_BANNER,
                     value: 'Overage users banner watched',
-                    name: `warn_overage_seats_${10}`,
+                    name: `error_overage_seats_${10}`,
                 },
             ],
         );
@@ -283,7 +283,7 @@ describe('components/overage_users_banner', () => {
         expect(savePreferences).toBeCalledTimes(1);
         expect(savePreferences).toBeCalledWith(store.entities.users.profiles.current_user.id, [{
             category: Preferences.OVERAGE_USERS_BANNER,
-            name: `warn_overage_seats_${licenseId.substring(0, 8)}`,
+            name: `error_overage_seats_${licenseId.substring(0, 8)}`,
             user_id: store.entities.users.profiles.current_user.id,
             value: 'Overage users banner watched',
         }]);
@@ -319,7 +319,7 @@ describe('components/overage_users_banner', () => {
         store.entities.admin = {
             ...store.entities.admin,
             analytics: {
-                [StatTypes.TOTAL_USERS]: seatsMinimumFor10PercentageState,
+                [StatTypes.TOTAL_USERS]: seatsMinimumFor10PercentageState + 1,
             },
         };
 
diff --git a/webapp/channels/src/components/invitation_modal/overage_users_banner_notice/index.tsx b/webapp/channels/src/components/invitation_modal/overage_users_banner_notice/index.tsx
index e070e65cfa..7d520d930f 100644
--- a/webapp/channels/src/components/invitation_modal/overage_users_banner_notice/index.tsx
+++ b/webapp/channels/src/components/invitation_modal/overage_users_banner_notice/index.tsx
@@ -58,7 +58,7 @@ const OverageUsersBannerNotice = () => {
     const preferenceName = `${prefixPreferences}_overage_seats_${prefixLicenseId}`;
 
     const overageByUsers = activeUsers - seatsPurchased;
-    const isOverageState = isBetween5PercerntAnd10PercentPurchasedSeats || isOver10PercerntPurchasedSeats;
+    const isOverageState = overageByUsers > 0 && (isBetween5PercerntAnd10PercentPurchasedSeats || isOver10PercerntPurchasedSeats);
     const hasPermission = isAdmin && isOverageState && !isCloud;
     const {
         cta,
@@ -120,7 +120,7 @@ const OverageUsersBannerNotice = () => {
             title={
                 <FormattedMessage
                     id='licensingPage.overageUsersBanner.noticeTitle'
-                    defaultMessage='Your workspace user count has exceeded your paid license seat count by {seats, number} {seats, plural, one {seat} other {seats}}'
+                    defaultMessage='Your workspace user count has exceeded your licensed seat count by {seats, number} {seats, plural, one {seat} other {seats}}'
                     values={{
                         seats: overageByUsers,
                     }}
diff --git a/webapp/channels/src/components/invitation_modal/overage_users_banner_notice/overage_users_banner_notice.test.tsx b/webapp/channels/src/components/invitation_modal/overage_users_banner_notice/overage_users_banner_notice.test.tsx
index 502ba954d9..6202f94b16 100644
--- a/webapp/channels/src/components/invitation_modal/overage_users_banner_notice/overage_users_banner_notice.test.tsx
+++ b/webapp/channels/src/components/invitation_modal/overage_users_banner_notice/overage_users_banner_notice.test.tsx
@@ -41,12 +41,12 @@ jest.mock('actions/telemetry_actions', () => ({
 
 const seatsPurchased = 40;
 
-const seatsMinimumFor5PercentageState = (Math.ceil(seatsPurchased * OverActiveUserLimits.MIN)) + seatsPurchased;
+const seatsMinimumFor5PercentageState = (Math.ceil(seatsPurchased * OverActiveUserLimits.MIN)) + seatsPurchased + 1;
 
-const seatsMinimumFor10PercentageState = (Math.ceil(seatsPurchased * OverActiveUserLimits.MAX)) + seatsPurchased;
+const seatsMinimumFor10PercentageState = (Math.ceil(seatsPurchased * OverActiveUserLimits.MAX)) + seatsPurchased + 1;
 
-const text5PercentageState = `Your workspace user count has exceeded your paid license seat count by ${seatsMinimumFor5PercentageState - seatsPurchased} seats`;
-const text10PercentageState = `Your workspace user count has exceeded your paid license seat count by ${seatsMinimumFor10PercentageState - seatsPurchased} seats`;
+const text5PercentageState = `Your workspace user count has exceeded your licensed seat count by ${seatsMinimumFor5PercentageState - seatsPurchased} seat`;
+const text10PercentageState = `Your workspace user count has exceeded your licensed seat count by ${seatsMinimumFor10PercentageState - seatsPurchased} seat`;
 const notifyText = 'Notify your Customer Success Manager on your next true-up check';
 
 const contactSalesTextLink = 'Contact Sales';
@@ -169,7 +169,7 @@ describe('components/invitation_modal/overage_users_banner_notice', () => {
                 {
                     category: Preferences.OVERAGE_USERS_BANNER,
                     value: 'Overage users banner watched',
-                    name: `warn_overage_seats_${licenseId.substring(0, 8)}`,
+                    name: `error_overage_seats_${licenseId.substring(0, 8)}`,
                 },
             ],
         );
@@ -234,7 +234,7 @@ describe('components/invitation_modal/overage_users_banner_notice', () => {
                 '?utm_source=mattermost&utm_medium=in-product&utm_content=overage_users_banner&uid=current_user&sid=',
         );
         expect(trackEvent).toBeCalledTimes(2);
-        expect(trackEvent).toBeCalledWith('insights', 'click_true_up_warning', {
+        expect(trackEvent).toBeCalledWith('insights', 'click_true_up_error', {
             cta: 'Contact Sales',
             banner: 'invite modal',
         });
@@ -248,7 +248,7 @@ describe('components/invitation_modal/overage_users_banner_notice', () => {
                 {
                     category: Preferences.OVERAGE_USERS_BANNER,
                     value: 'Overage users banner watched',
-                    name: `warn_overage_seats_${generateId().substring(0, 8)}`,
+                    name: `error_overage_seats_${generateId().substring(0, 8)}`,
                 },
             ],
         );
@@ -289,7 +289,7 @@ describe('components/invitation_modal/overage_users_banner_notice', () => {
         expect(savePreferences).toBeCalledTimes(1);
         expect(savePreferences).toBeCalledWith(store.entities.users.profiles.current_user.id, [{
             category: Preferences.OVERAGE_USERS_BANNER,
-            name: `warn_overage_seats_${licenseId.substring(0, 8)}`,
+            name: `error_overage_seats_${licenseId.substring(0, 8)}`,
             user_id: store.entities.users.profiles.current_user.id,
             value: 'Overage users banner watched',
         }]);
diff --git a/webapp/channels/src/i18n/en.json b/webapp/channels/src/i18n/en.json
index eaf03b180b..b2fff491da 100644
--- a/webapp/channels/src/i18n/en.json
+++ b/webapp/channels/src/i18n/en.json
@@ -1565,6 +1565,14 @@
   "admin.license.upload-modal.successfulUpgradeText": "You have upgraded to the {skuName} plan for {licensedUsersNum, number} seats. This is effective from {startsAt} until {expiresAt}. ",
   "admin.license.upload-modal.title": "Upload a License Key",
   "admin.license.uploadFile": "Upload File",
+  "admin.license.userSeatAlert.closeBtnTooltip": "Dismiss",
+  "admin.license.userSeatAlert.contactSales": "Contact Sales",
+  "admin.license.userSeatAlert.dangerMessage": "All licensed seats are now in use. Additional users may result in true-up charges at your next renewal. To maintain compliance and uninterrupted access, you may limit new sign-ups, or contact us to extend your license.",
+  "admin.license.userSeatAlert.dangerTitle": "Your workspace has reached 100% of your licensed seats",
+  "admin.license.userSeatAlert.infoMessage": "Your organization is approaching full license utilization. Now is a good time to assess future needs and align usage with procurement planning. Contact us to explore available options.",
+  "admin.license.userSeatAlert.infoTitle": "Your workspace has reached 95% of your licensed seats",
+  "admin.license.userSeatAlert.successMessage": "Congratulations! Platform adoption is strong across your organization. To ensure uninterrupted growth, our team can assist in scaling your license to meet operational requirements.",
+  "admin.license.userSeatAlert.successTitle": "Your workspace has reached 90% of your licensed seats",
   "admin.licenseSettings.teamEdition.teamEditionRightPanel.acceptTermsFinal": ". Upgrading will download the binary and update your team edition.",
   "admin.licenseSettings.teamEdition.teamEditionRightPanel.acceptTermsInitial": "By clicking <b>Upgrade</b>, I agree to the terms of the Mattermost ",
   "admin.licenseSettings.teamEdition.teamEditionRightPanel.eeLicenseLink": "Enterprise Edition License",
@@ -3105,7 +3113,7 @@
   "analytics.team.activeUsers": "Active Users With Posts",
   "analytics.team.newlyCreated": "Newly Created Users",
   "analytics.team.noTeams": "This server has no teams for which to view statistics.",
-  "analytics.team.overageUsersSeats": "This exceeds total paid seats",
+  "analytics.team.overageUsersSeats": "This exceeds total licensed seats",
   "analytics.team.privateGroups": "Private Channels",
   "analytics.team.publicChannels": "Public Channels",
   "analytics.team.recentUsers": "Recent Active Users",
@@ -4462,8 +4470,8 @@
   "licensingPage.infoBanner.startTrialTitle": "Start a free 30-day tral of Mattermost Enterprise Advanced",
   "licensingPage.overageUsersBanner.cta": "Contact Sales",
   "licensingPage.overageUsersBanner.noticeDescription": "Notify your Customer Success Manager on your next true-up check. <a></a>",
-  "licensingPage.overageUsersBanner.noticeTitle": "Your workspace user count has exceeded your paid license seat count by {seats, number} {seats, plural, one {seat} other {seats}}",
-  "licensingPage.overageUsersBanner.text": "(Only visible to admins) Your workspace user count has exceeded your paid license seat count by {seats, number} {seats, plural, one {seat} other {seats}}. Purchase additional seats to remain compliant.",
+  "licensingPage.overageUsersBanner.noticeTitle": "Your workspace user count has exceeded your licensed seat count by {seats, number} {seats, plural, one {seat} other {seats}}",
+  "licensingPage.overageUsersBanner.text": "(Only visible to admins) The user count exceeds the number of licensed seats by {seats, number} {seats, plural, one {seat} other {seats}}. Purchase more seats to stay compliant.",
   "link_preview.image_preview": "Show Image preview",
   "link_preview.remove_link_preview": "Remove link preview",
   "list_modal.paginatorCount": "{startCount, number} - {endCount, number} of {total, number} total",
diff --git a/webapp/channels/src/utils/constants.tsx b/webapp/channels/src/utils/constants.tsx
index 0fc2234733..c58982c9f2 100644
--- a/webapp/channels/src/utils/constants.tsx
+++ b/webapp/channels/src/utils/constants.tsx
@@ -2250,9 +2250,12 @@ export const DataSearchTypes = {
     MESSAGES_SEARCH_TYPE: 'messages',
 } as const;
 
+// Currently, the overage user limits are set to 0, which means that the overage active users warning
+// is immediatly shown when over 100% usage.
+// Originally it was set to Min 5% and Max 10% (5% would be a blue warning and 10% would be a red warning).
 export const OverActiveUserLimits = {
-    MIN: 0.05,
-    MAX: 0.1,
+    MIN: 0,
+    MAX: 0,
 } as const;
 
 export const PageLoadContext = {