See Flow Control for an explanation of it. You should always use hardware flow control if possible. Your communication program or "getty" should have an option for setting it (and hopefully it's enabled by default). It needs to be set both inside your modem (by an init string or default) and in the device driver. Your communication program should set both of these (if you configure it right).
If none of the above will fully enable hardware flow control. Then you must do it yourself. For the modem, make sure that it's either done by the init string or is on by default. If you need to tell the device driver to do it is best done on startup by putting it in a file that runs at boot-time. See the subsection Boot-time Configuration You need to add the following to such a file for each serial port (example is ttyS2) you want to enable hardware flow control on:
stty -F /dev/ttyS2 crtscts
stty crtscts < /dev/ttyS2
If you want to see if flow control is enabled do the following: In minicom (or the like) type AT&V (or ATI4 on 3Com modems) to see how the modem is configured and look for &K3 (or &H1 on 3Com modems) which means hardware flow control. Then without exiting the communications program (such as minicom) see if the device driver knows about it by typing: stty -F /dev/ttyS2 -a. Look for "crtscts" (without a disabling minus sign). Remember that communication programs change these settings so you may want to check them after you have started up your communication program.