'Attendance awards are a great idea' – said no parent with a disabled or chronically ill child, ever.
I can just about live with a piece of paper and a mention in a newsletter, I guess, but when it leads to entry into a prize draw, or a mufti day, or something tangible, it is totally unacceptable and quite probably illegal (I believe it would fall foul of the 2010 Equality Act if challenged).
As PP have said, you can give out awards for all sorts of things – effort, behaviour, improvement, helpfulness – to the less academic/sporty/musical.