The occurrence of dislocations containing a ⟨c⟩ component and deformation bands in ε martensite phase, is reported. The analysis of the deformation microstructure by means of transmission electron microscopy was carried out for the hcp ε martensite phase in Fe-16.6Mn-0.03C (wt.%). The observed accommodation of c-axis deformation is considered to be essential for the homogeneous deformation of the hcp ε martensite. It is proposed that the observed dislocations containing a ⟨c⟩ component and deformation bands play an important role in the mechanism of stress-relaxation by enabling c-axis deformation.