The 20-year-old production operative had part of his left thumb severed at Kestrel Timber Frame Ltd in Northfield Road, Market Deeping while cutting insulation foam.
Spalding Magistrates heard that the employee was using a table mounted circular saw when his hand was caught in the blade.
HSE investigators told the court it had become standard practice by employees to remove the guard as the height adjustment mechanism on the saw was broken.
The table saw was also not big enough to adequately support the foam being cut, therefore it was necessary for him to support the foam with his hands rather than using a push-stick.
The employee was off work for seven weeks after the 11 May 2010 incident but has since returned to his job.
Kestrel Timber Frame Ltd, of Bourne, Lincolnshire, pleaded guilty to safety breaches and was fined £6,700 and ordered to pay costs of £4,117.