In an article for The Participatory Economy Project, Robin Hahnel, who co-created the participatory economy model, discusses how decisions around pay are made under a participatory economy.
A summary of the article can be found below:
In capitalist economies you are evaluated, and your pay is decided by the firm’s owner, or by a personnel office under his control. Of course, if there is a union contract it may specify some procedures which have been agreed to. In a participatory economy you will be evaluated, and your compensation will be decided by your coworkers. But again, what we propose is that each worker council decide for itself what procedures to establish to do this. Moreover, we anticipate that different worker councils would decide to go about this very differently.
You can read the article here.