But Eagle Star will receive a warning letter over the incident, which involved employees having to walk barefoot on hot embers. Two needed treatment at a burns unit. All have since returned to work.
The accident happened at the Cheltenham and Gloucester Moat House Hotel last July in an event organised by Michael Carroll of Infinite Breakthrough Technologies.
Environmental health officials from Tewkesbury Borough Council launched an investigation and legal officers are understood to have recommended court action.
But councillors voted to rule out prosecuting anyone over the incident. Instead, they will send warning letters to Eagle Star and the event organisers.
The council chief executive, Howard Davis, said: "We believe there was sufficient evidence to prosecute Eagle Star and Mr Carroll for breaches of health and safety legislation.
"But having taken into account the steps taken by the company and the fact that Mr Carroll no longer works within the firewalking field, it was considered more appropriate to issue warning letters."
Jeff Wagland, director of external affairs at Eagle Star, said: "Obviously we are pleased that they are not going to prosecute, but we are certainly not complacent about the effect this has had on the company.
"Our main concern was that the seven people should recover as soon as possible and I am pleased to say that is the case. This is a lesson we will learn by. The chances of our doing something like this again are on the far side of zero."Reuse content