Add the asp:postbacktrigger for the UpdatePanel and give the ControlID.
See the code below which will help you.
<asp:UpdatePanel ID="UpdatePanel1" runat="server" UpdateMode="conditional">
<Triggers>
<asp:PostBackTrigger ControlID="Button1" />
</Triggers>
<ContentTemplate>
<asp:Panel runat="server">
<asp:FileUpload ID="FileUpload1" runat="server" />
<asp:Button ID="Button1" runat="server" Text="Upload" OnClick="Button1_Click" />
</asp:Panel>
</ContentTemplate>
</asp:UpdatePanel>