The man, aged 43, of Liverpool, lost part of his right arm after the incident at Recresco Ltd's Manisty Wharf site in Ellesmere Port, Cheshire, when it became trapped in a conveyor belt he was maintaining.
Liverpool Crown Court heard how, on 26 January 2014, Mr Grace's safety glove got caught on a moving conveyor belt on the glass sorting machine on which he was carrying out maintenance.
His arm was pulled into the machine and severed from above the wrist and attempts to reattach his hand were unsuccessful.
An investigation by the Health and Safety Executive (HSE) found multiple failings by the company, which put their own and agency workers at risk. The company had failed to assess the risks associated with working on moving conveyor belts as well as ensuring the machinery across their site was properly guarded.
The company did not have a safe system of work in place and there was insufficient information, instruction or training relating to the conveyors, which routinely exposed their workers to dangerous situations.
Recresco Ltd, was fined £50,000 with costs £21,625.70 and a £120 victim surcharge after pleading guilty to breaching Regulation 2 and 3 of the Health and Safety at Work etc Act 1974.
Following the case HSE's Inspector Jane Carroll, said: "Companies must recognise the need for proper safe systems of work, guarding and training to protect workers who are operating or maintaining heavy machinery like the conveyor belts used in the recycling industry."