The following steps may help (check after each):
If you have not yet done so, update both your iPhone and your Apple Watch to the latest software, starting with your iPhone (be sure to make a backup first):
- Update the iOS software on your iPhone, iPad, or iPod touch - Apple Support
- Update the software on your Apple Watch - Apple Support
When answering a call, be sure tap just once on the Answer button. Accidentally tapping again will turn on Mute for your end of the call, so the caller will not hear you (to turn off Mute, tap the same button again).
Remove any protective case or film that you may be using on your Apple Watch if it is blocking the microphone port (the lower of the two ports on the opposite side to the buttons):
Clean your Apple Watch, paying particular attention to the microphone port, in case it has become blocked by debris.
- Be sure to follow Apple's cleaning instructions.
- Cleaning your Apple Watch - Apple Support
- Important handling information
Restart your Apple Watch and iPhone, turning both devices off together, then restarting your iPhone first:
If the issue persists, next try unpairing and re-pairing your Apple Watch:
- The Watch app on your iPhone takes a backup of your watch automatically when unpairing via the app.
- Initially choose to Restore from Backup during set up (most data and settings will be restored, with some exceptions such as Apple Pay cards and passcode).
- If the issue persists, next try unpairing and setting your Apple Watch up as a new watch.
- Unpair your Apple Watch and iPhone - Apple Support
- Set up your Apple Watch - Apple Support
If the issue still persists, then I suggest that you contact Apple Support (remote diagnostics and/or mail-in service may be available, if required), make a Genius Bar reservation or visit an Apple Authorised Service Provider for assistance: