How to create 1 row in SQL server into many rows

One possible solution would be a recursive CTE:

WITH cte As
(
    SELECT
        Emp_ID,
        Emp_FullName,
        CASE WHEN leaves < 12 THEN leaves ELSE 12 END As leaves,
        leaves - 12 As Remaining
    FROM
        YourTable
    
    UNION ALL
    
    SELECT
        Emp_ID,
        Emp_FullName,
        CASE WHEN Remaining < 12 THEN Remaining ELSE 12 END,
        Remaining - 12
    FROM
        cte
)
SELECT
    Emp_ID,
    Emp_FullName,
    leaves
FROM
    cte
;

However, by default you will get an error if a single row produces more than 100 output rows.

Another option would be to use a "numbers" or "tally" table:

WITH cteTally As
(
    SELECT
        ROW_NUMBER() OVER (ORDER BY (SELECT NULL)) - 1 As N
    FROM
        sys.all_columns
),
cteRanges As
(
    SELECT
        12 As Size,
        N * 12 As StartValue,
        (N + 1) * 12 As EndValue
    FROM
        cteTally
)
SELECT
    E.Emp_ID,
    E.Emp_FullName,
    CASE 
        WHEN E.leaves > R.EndValue THEN R.Size 
        ELSE E.leaves - R.StartValue 
    END As leaves
FROM
    YourTable As E
    CROSS APPLY cteRanges As R
WHERE
    T.leaves > R.StartValue
ORDER BY
    E.Emp_ID,
    R.StartValue
;

SQL is not a data processing library - it's a data storage and retrieval engine.

What you are trying to do is possible in SQL using temporary tables and a fair amount of code, but it's not really a practical thing to do - that kind of processing is much, much better done in your Presentation / Data Access layer language which will have much better facilities for that.
If only because when the requirements change (and boy, do they change ) the code will be a lot simpler to understand and modify - making your job easier and the app more reliable.