In my games, we tend to put absent players in the background. They're doing this or that and are out of focus, so to speak. Half the time, the player in question or the other players tend to do the heavy lifting in explaining why that character is MIA. We haven't kicked out anybody because they've been forced to be absent, but we have had people leave because they couldn't commit to being at the game very often.
As for handing out XP (or similar stuff), in my current games it varies depending on the game and the people and the circumstances:
In our Shadowrun game, if you're not there, you get nothing. No karma, no money. It's just that kind of game for us. Progression tends to be pretty slow in Shadowrun anyway, so missing a session or two doesn't hurt anybody all that much.
In our Star Wars game, absent players get a % of the XP that the present players get. We play 8-10 hour sessions each week, so we get a lot of experience. Without the percentage awarded, the power gap grows far far too quickly and the punishment for player death is even worse. In our game, a new character begins play at a level equal to the lowest level character and without the partial experience we've ended up at times with characters as low as level 4 together with characters at level 9. Even with the partial reward we've currently hit the point where the highest level character is very nearly level 13 and the lowest is only 8. Then again, this Star Wars game is about to blow up, so it may be a moot point.
In my Dark Heresy game, the GM hands out experience based on how we move the plot along and as long as we're there for at least part of what happened, everybody gets the same experience. Unfortunately, it's a ~very~ small game, so if we're missing more than 1 person we can't even really have a game session. So even though it's very fair as to the rewards, the game gets outright canceled a lot.
