Where diggers work with spades — it's awful (3,4)
I believe the answer is:
the pits
'awful' is the definition.
(informal phrase meaning something very bad)
'where diggers work with spades' is the wordplay.
'where diggers work' becomes 'the pit' (diggers might be used in a pit or quarry).
'with' says to put letters next to each other.
'spades' becomes 's' (abbreviation in card games).
'thepit'+'s'='THE PITS'
'it's' is the link.
(Other definitions for the pits that I've seen before include "place in motor-racing?" , "terrible situation" , "Absolutely worst person possible" , "place to service a car?" , "A very bad situation (informal)" .)