Hi IMK,
After Windows Server Essentials is integrated with Windows Azure Active Directory, password synchronization is started automatically between your on-premises Active Directory and Windows Azure Active Directory. Please note that password synchronization is set to be one-directional, where a password in the on-premises Active Directory always takes precedence over what’s in Windows Azure Active Directory. The password synchronization happens instantly when a password is updated in the on-premises Active Directory.
Given the information above, if we set the PasswordNeverExpires settings in the on-premise server, it will take effect in Office 365 and we don’t need to set the settings separately in Office 365.
For more details, please refer to the articles below:
Services Integration Overview for Windows Server 2012 R2 Essentials