what to do with exchange mailbox if employee is on leave?

Could you rephrase your question?

What are you trying to achieve by asking the question, are you coming a security perspective?

We have an employee that has left for Iraq for a year.  He is still employed and I would like to keep everyting intact, except for his mailbox won't be looked at for about a year.  I would like to disable the account, but don't want the excess traffic from NDRs.

Not trying to be flippant...but why do anything with it? If you don't want his mailbox to receive msgs sent to groups, etc...remove him from the group. If you don't want the mailbox to receive mail, you could remove his current address and assign him another...re-assign his old address to you or someone else that would then receive any residual mail for him. Or, if he has no mail worth keeping and should not be receiving anything else notable...delete his mailbox and then disable his account.

You have the option to let someone else manage his mailbox.  That way emails to him are monitored and customers don't think he is ignoring them.  Hopefully this helps.

Do you utilize a backup solution for Exchange, like Backup Exec?  If so, you could make a complete backup of his mailbox, then delete the mailbox from your Exchange server.  When he comes home, restore the mailbox and it will be as if it was always there.  If you don't have a backup solution, you could always make a .PST file for his account and move everything to it, and keep it stored somewhere secure until he gets back.  

Solution:  HIde mailbox from address list.  Disable the account.  Change Delivery Options to Authencated Only and Only from a DG-Nomemebrs.  Grant Self to AEA so that there will not be so many returned to sender with NDR.  

It's up to the Supervisor.  I see your point.  I agree.  Nonetheless, we need to keep the mailbox for billing out to that department.  Nobody wants to get that person's mail while he is gone.  We still want people to know he is employed here because he is still  and 'active' employee.   NDR's will fill the server event log and we may miss an error or warning that is needed.