When he saves the revised XLS file,
(a) It is first saved under a temporary name.
(b) If there are no errors, Excel will then delete the original file.
(c) Then it will rename the temporary file.
Some 3rd party "undelete" software is able to trap the deletion that occurs in
step (b) and move the file to the recycle bin.
The program I use, Undelete from Executive Software, can't. It can recycle a
file that I delete from PowerDesk (a replacement for Windows' Explorer). It
can also recycle the deleted files, when, from PowerDesk, I move them into a
ZIP file.
But it can't see the deletion that occurs in step (b) above. I don't know what
the underlying difference is between the methods that those two programs use
to delete files.
I do the same as you WRT to renaming with a sort of "version number" when
making extensive changes to an important file.