Mercenary Auto-Battle is the ability to have your mercenaries, but not your main character, to battle autonomously.
Mercenary Auto-Battle is always available to you, without any license requirement.
Click the Mercenary Auto-Battle button in the Battle Controls to enable or disable the selected Mercenary's participation in Auto-Battle.
This differs from Auto-Battle, which includes your full formation, including your main character.
Click the Merc Auto-Battle button under the Main Character's Portrait to enable Merc Auto-Battle for all mercenaries in the formation.
Formation window[]
Click the Merc Auto-Battle button under any Mercenary's Portrait to enable Merc Auto-Battle for that mercenary.
You can also enable Merc Auto-Battle at the Formation-level in the Formation screen.
You can enable Mercenary Auto-Battle for individual mercenaries or your full formation from the formation window.
TBS[]
In TBS Skirmish, your mercenaries can use Mercenary Auto-Battle for free (without a license), but your main character cannot.