Inspectors found staff at Complete Utilities Ltd were not fully trained to operate plant vehicles, and the work site was "chaotic and disorganised".
At Gloucester Crown Court, the firm was also ordered to pay costs of £27,000.
Employee Spencer Powles, 62, from Coleford, died 10 days after the incident on October 24, 2012.
He suffered severe injuries to his abdomen when a telehandler lurched forward, pinning him against a metal shipping container at the firm's Maisemore site.
A telehandler is a four-wheel drive machine, mostly used in farming and industry, which has an interchangeable bucket on the end of a telescopic arm.
Speaking after sentencing, health and safety inspector Caroline Bird said: "This terrible incident could have been avoided and Mr Powles would still be here today if Complete Utilities had provided proper training to staff in the operation of this telehandler.
"It is not acceptable to put drivers into vehicles that they have not previously operated, or without the necessary training by a qualified and competent instructor."
The BBC has tried to contact Complete Utilities Ltd for a response to the case and the criticisms of its operations.

That's how one financier described Dominic Chappell's plans for acquiring and reviving BHS to MPs today.
Andrew Frangos of Cornhill Capital was approached by the three-time bankrupt Chappell to raise money secured against property to use as working capital - the money you need for day to day running of a company.
Mr Frangos said that BHS was not the limit of his ambitions and that Chappell had plans to one day buy Arcadia - the parent company run by Sir Philip Green. Ultimately, Chappell didn't use Cornhill Capital and the two of them are in dispute over unpaid bills.
He was joined in the commons by representatives from accountants Grant Thornton and lawyers Olswang to explain their involvement as advisers to Mr Chappell.
Both made extensive use of client confidentiality protection but several important themes emerged.
Retail Acquisitions Limited did not delve very deeply into the pension problems. Meetings between Chappell and the Chris Martin, chair of the BHS pension scheme, totalled less than half an hour and Grant Thornton's Mark Byers said he was denied the usual access to the pension trustees and their advisors.
On the bigger picture, MPs asked what the professional advisers made of this "punt". Why did they believe that a retail novice with a chequered financial background could succeed in turning BHS around when a feted retail tycoon had failed? We got two interesting answers.
First, a central part of the turnaround plan involved getting the landlords for the 164 stores to agree to reduce the rent. Mark Byers, from Grant Thornton said it would be difficult to have that negotiation, for BHS essentially to plead poverty, as long as BHS was part of the bigger Arcadia group.
Second, it wasn't their job.
So far there is no smoking gun. What is emerging from these sessions is that lots of professional firms were tasked with making sure small bits of the deal ticked a number of boxes. No one, it seems, was there to look Mr Chappell in the eye and judge whether he had the ability, or even the intention, of making BHS work.
MPs will no doubt suggest that role fell to Sir Philip Green himself as the seller. He appears before the committees on 8 June.
A Gloucester-based firm has been fined £80,000 after a man was crushed between an industrial vehicle and a shipping container at work and later died.
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"A bit of a punt" - the BHS business plan.