At Kingsbury Machine Tool Corp. in Keene, N.H., everyone calls it IPP, the income protection plan. The program extends long-term sick-pay benefits to all employees, whether they are hourly assembly-line workers or salaried professionals. "We don't want any group of employees to think they are less important than any other group," says Roger Hetherman, the company's vice-president of employee and community relations.

The system works like this: Any manufacturing employee who has passed a three-month probationary period is eligible for 26 weeks of sick-pay benefits per year, at 50% of salary. During the first three years of employment, however, the benefits kick in only when the individual has missed four to six days of work. After four years of employment, a worker is eligible for two weeks' sick pay at 100% of salary, plus 24 weeks at 50% of salary. In year five, the employee gets 3 full weeks of sick pay and 23 weeks of half pay -- and so forth, up to year 28, at which point he or she is eligible for the maximum of 26 weeks' sick pay at 100% of salary.

According to Heatherman, Kingsbury's policy contrasts with the approach of most companies, which "offer a sickness and accident policy that pays out a fixed amount per week, say, $80, $90, or $120, regardless of how much the employee may be earning or how long he has been with the firm." Under Kingsbury's plan, "a 10-year employee of the company who goes into the hospital for a serious operation knows he can count on eight weeks of 100% pay. That can make quite a difference to his family finances."

The plan hasn't encouraged employees to call in sick, Hetherman says. Kingsbury's lost-time percentage has actually dropped from 3% per year to 2% or less since IPP's introduction. "We monitor lost time very closely," says Hetherman. "We know people aren't abusing the system."