The Colonies are areas of North America that have been contaminated by pollution and radioactive waste. Gilead, using the system devised by Commander Joseph Lawrence, often sends those convicted of various crimes, known as Unpeople, to the Colonies, to help clear them up as punishment. The prisoners there wear gray clothing. The Colonies are known to have horrific living conditions, with prisoners or Unpeople sent there being used as slave labor. Those sent to the Colonies often die quickly from sickness brought on by the pollution and poor living conditions, and from malnutrition and over-exertion, with most dying after three years. Being sent to the Colonies is regarded by many as a fate worse than death, and the mere mention of them can instill great dread in the characters. It may be the case, but others may say the reverse.
The Colonies are watched and policed by Guardians, though the Aunts primarily act as overseers and slave drivers. But like the society they were banished from, they are also heavily monitored by the Eyes in case trouble erupts there e.g. murder, fighting, defiance, rioting, rebellion.
Notably, after being shown a video of the Colonies by Aunt Lydia, the once-rebellious and outspoken Moira chose to become a prostitute at Jezebel's rather than be sent to the Colonies. Some women who were convicted of serious crimes, such as being an intellectual, or a gender traitor, but were still fertile, willingly chose to become Handmaids over being sent to the Colonies. It is mentioned that Handmaids that fail to conceive are eventually declared Unwomen and sent off to the Colonies, leading many Handmaids to take risky measures in an effort to get pregnant and be spared such a fate. It is also noted by Moira that a small populace of gay men exist in the Colonies, and that a dress code is enforced in which all laborers are made to wear grey uniforms. She theorizes that this is done for the purpose of humiliation. Prisoners who fail and or refuse to do their tasks and or follow harsh orders from the Aunts and Guardians are severely punished, and if they continue their insubordination, they are executed.
It is mentioned in the Epilogue that while most are sent to the horrific areas, if one were lucky, they could be sent to do less hazardous tasks, such as picking cotton or harvesting 100% self-sufficient food. It is unsure if this is actually true in the TV series.