Don't ya just love it when that happens!
Very sorry to hear that news, Meadow, but sounds like a trick I've heard of before in the UK where an employer could get rid of someone easily as long as they hadn't worked there for more than 2 years. It seems employees' rights change once they've worked those 2 years. It must be 3 months in NZ. If the employer is accredited, he should be reported for dishonourable behaviour.
If Colin could find another job, still using his skills that INZ wants, he could apply for a Variation of Conditions on his WP. It says:
have been employed in New Zealand during the currency of that visa or permit for a period of 24 months by an accredited employer (or another employer if you were granted a Variation of Conditions to your work permit by Immigration New Zealand)
From
here. I just grabbed a section from this page as I don't remember the full circumstances of Colin's visa situation. Perhaps you can read through to check this is right for him.
Good luck. I hope he can find a more secure position with another company without too much trouble.