Mark Marshall, of Retford, was working on an assembly line at Kybotech's site in Ollerton Road, Tuxford, when the incident happened on 11 July 2013.
His job was to remove treated wood panels from a conveyor and stack them for storage, using an old glove to manually apply wood treatment to any areas that had not been fully coated. This glove fell on to the conveyor in front of the drive mechanism and Mr Marshall instinctively went to reach for it. As he did so, his gloved hand was drawn into the drive mechanism through a gap above the conveyor chain.
His hand and much of his forearm was severed and it was later reduced further during surgery. He will also need a further operation. Mr Marshall has not been able to return to work since.
A Health and Safety Executive (HSE) investigation found a piece of plastic that would have reduced the size of the opening in front of the drive mechanism had previously been damaged meaning the opening was not small enough to prevent a hand from being drawn in.
The guarding was also unsuitable in that it was not fixed into position, although this was not the cause of the incident. An inspection revealed guarding on the drive mechanism of two other conveyors was also unsuitable.
Kybotech, of Grassthorpe Road, Sutton-on-Trent, pleaded guilty to breaching Regulation 3(1)(a) of the Management of Health and Safety at Work Regulations 1999 and Regulation 11(1) of the Provision and Use of Work Equipment Regulations 1998.
HSE inspector Stuart Pilkington said: "This was an extremely traumatic incident, not just for Mr Marshall, but for his colleagues as well.
"It was also easily preventable. Had the risks been properly assessed by Kybotech Ltd, they would have identified the need to improve the existing guarding so that any openings were of a size that prevented a person's hand being drawn in.
"This case highlights the importance of ensuring dangerous machinery is properly guarded."