Apple Watch won't unlock my iPhone

Make sure your devices have the most up to date Watch OS and IOS

Make sure that both your devices meet the criteria

See Unlock your iPhone with Apple Watch when you're wearing a face mask

I recently had the same issue with my Watch 4 and corrected by restarting bluetooth on my iPhone 12 Pro and restarting my Watch.

Read this;

https://www.elitedaily.com/p/why-wont-my-apple-watch-unlock-my-iphone-in-ios-145-heres-what-you-should-check-74895046