Dressed heel, nicked by end of chisel (4)
I believe the answer is:
clad
'dressed' is the definition.
(to be clad in something is to be dressed in it)
'heel nicked by end of chisel' is the wordplay.
'heel' becomes 'cad' (both can mean a dishonourable person).
'nicked by' is an insertion indicator (inserted letters nick or cut their way in).
'end of' indicates one should take the final letters.
The final letter of 'chisel' is 'l'.
'cad' placed around 'l' is 'CLAD'.
(Other definitions for clad that I've seen before include "Invested" , "Cover with insulation" , "Provided with covering" , "in dress perhaps" , "Dressed" .)