Paul Turney, a supervisor at CEP Ceilings Ltd, was cleaning the glue from a laminating machine at the company's base in Verulam Road, Stafford, when his arm became stuck in the gears of the equipment.
The 61-year-old from Stafford had to have a skin graft after losing a 'chunk' of flesh from his arm in the accident on January 21 last year.
Health and safety executive Inspector Wayne Owen told Stafford Magistrates Court that Mr Turney had been left with a loss of feeling in his arm and was permanently scarred after removing a safety guard and scraping hardened glue from moving rollers.
He added that the accident could have been avoided if the firm had carried out carried out a risk assessment and put a safe operating procedure in place for cleaning and using the machine.
"My Turney drove himself to hospital after the accident and has returned there nine times," he said.
"There was no system in place advising workers how to clean the laminate machine. Employees were left to devise their own method and Mr Turney was acting in what had been standard practice within the company for six years.
"There is no evidence that he was subject to regular monitoring and the company admits it did not carry out any monitoring on how the laminator was being cleaned or used.
"The defendant should have ensured adequate control measures were in place because this accident was easily avoidable if the company had monitored practice."
The firm pleaded guilty to contravening a health and safety regulation and breaching general duty to an employee.
James Aggeros, defending, apologised on behalf of the firm's managing director Kevin Gale and director Stephen Ross, who both attended court.
He said the company had a 'generally good' health and safety record and had been in business for almost 50 years.
"The company apologises for committing this offence. Mr Turney did suffer a serious injury as a result of this accident but he returned to work fairly shortly afterwards and it has not affected his ability to work," he said.
"The company did have rules that Mr Turney signed, which said no cleaning of any machine ought to take place while it is running.
"Liability has been accepted and Mr Tunney will be compensated for the injury he received.
"This was a one-off in failing to deal with health and safety measures for machines."
He added that since the accident, the company now has a new method for cleaning its machines, which do not involve the removing of any safety guards.
The firm was fined £12,000 on each of the two charges and was ordered to pay £1,194 costs and a £120 victim surcharge.
Chair magistrate Geoffrey Lacey said: "You failed to ensure the health and safety of an employee and failed to produce a safe system of work."