WorkSafe's investigation found that after a similar accident on a sausage casing machine two years earlier, NZCC Ltd employed an engineer whose proposed solutions proved to be ineffective.
The company then reverted to using the machine in its unsafe state. The sausage casing machine in which the second worker was injured was in the same unsafe state.
The fine and reparation was on top of $10,000 it had already paid the victim.
WorkSafe's chief inspector Hayden Mander said it was important to make sure machines met required safety standards and that effective safety protocols were in place.
He said the engineer did not know the relevant machinery safety standards but instead of giving up and using the machine when it was unsafe, NZCC Ltd should have sought help from a machinery expert with proper knowledge.
"The company's failure to address a known safety issue has left the worker with significant, and completely unnecessary, injuries.
"This is powerful machinery which is able to cause serious injury. Employers should always ensure safety precautions are in place and workers are kept out of harm's way."