Tews Engineering in Petersfield was fined £10,500, plus another £10,500 in costs, after admitting failing to protect the health of employees and failing to carry out a proper risk assessment.
Employee Bill Leanard made a complaint to HSE about his excessive use of vibrating tools while working, which had caused him to suffer hand arm vibration system (HAVS).
Leonard had informed his employer of his symptoms and asked to be redeployed for the sake of his health.
However, the company continued to require him to work predominantly with vibrating tools, exacerbating his health problems.
Leonard now has permanent damage to his hand, making it impossible for him to continue his work.
HSE inspector Ray Kelly said "The worker in this case has suffered unnecessary, permanent disability because of a failure to manage his health and safety at work.
"Employers should take heed that when HSE finds evidence of flagrant breaches of health and safety law, particularly where there is a history of previous warnings and advice as was the case here, we will not hesitate to prosecute."