The 42-year-old worker from Stoke on Trent, who has asked not to be named, severed his finger while using a circular bench saw at Scott Timber Ltd on 12 January 2011.
A Health & Safety Executive (HSE) investigation found that the top guard on the saw had not been adjusted correctly, the required 'push stick' protection device was not attached to the machinery, and the employee had not been given sufficient training to operate the saw.
Stafford Magistrates' Court this week heard that the victim was off work for several months as a result of the incident, and his day to day life has also been affected.
Scott Timber Ltd of Oldfields Business Park, Birrell Street, Stoke on Trent, pleaded guilty to breaching section Regulation 11(1) of the Provision and Use of Work Equipment Regulations 1998 (PUWER).
The company was fined £5,000 by the court, and ordered to pay costs of £2,309.
HSE inspector Katharine Walker said: "This incident was wholly preventable. If the company had put the appropriate precautionary measures - including a correctly adjusted guard and a push stick - in place, it simply would not have happened.
"Circular saws are in widespread use across the woodworking industry, and have a relatively high incident level. The majority of circular saw bench incidents result in fingers being severed, or requiring amputation, and in most cases occur when the saw guard was either missing or not properly adjusted.
"The requirements for guarding, protective devices and machine operator training are set out in the PUWER Approved Code of Practice (ACOP), which explains to the employer what he needs to do on a practical level to comply with the law. This publication is well known in the industry and is free to download from the HSE's website. Any companies working with these types of machinery should make sure that they are familiar with it."