They can require it all they want, but if the company has no presence in Poland, they cannot actually make them do so.
> Or else get banned from operating in your country
Which is fine with many companies.
> You may also be entitled to rights under local employment laws regardless of what it says in your contract, which could also lead to the company being fined or banned.
Sure, but entitlement under local employment law is worthless against company in a different jurisdiction.
Yes, the foreign company can obviously decide to ignore the Polish government. As a consequence they will have to stop employing all their “contractor” employees in Poland. If they’re happy with that situation then… congrats to them?
What it can do, however, is that it can go after the worker. Is the government of Poland so vindictive to actually go after individuals who commit a crime of working for a foreign company?
Based on many of my friends having this exact arrangement for years, I think the answer is, in fact, no: they happily send invoices every month, get paid, and (less happily) pay taxes and ZUS contributions. It all works out just fine.
What could happen to you: you get billed for the unpaid taxes and payroll contributions you should have been making. And possibly charged penalties or even fined for tax evasion.
Depends on the country’s specific laws and their government’s willingness to pursue things like this.